nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2013‒03‒30
fourteen papers chosen by
Angelo Zago
University of Verona

  1. Reallocation and Technology: Evidence From The U.S. Steel Industry By Allan Collard-Wexler; Jan De Loecker
  2. Quantifying Productivity Gains from Foreign Investment By Christian Fons-Rosen; Sebnem Kalemli-Ozcan; Bent E. Sørensen; Carolina Villegas-Sanchez; Vadym Volosovych
  3. Groundnut Production and Climatic Variability: Evidence from Uganda By Aizhen Li; Boris E. Bravo-Ureta; David K. Okello; Carl M. Deom; Naveen Puppala
  4. Product Quality and Firm Heterogeneity in International Trade By Antoine Gervais
  5. The Location of Industrial Innovation: Does Manufacturing Matter? By Isabel Tecu
  6. The energy transition of the transition economies : an empirical analysis By Zhang, Fan
  7. Estimating Alternative Technology Sets in Nonparametric Efficiency Analysis: Restriction Tests for Panel and Clustered Data By Anne Neumann; Maria Nieswand; Torben Schubert
  8. Factors of Economic Growth in Latvia By Krasnopjorovs, Olegs
  9. New measures of output, labour and capital in industries By Voskoboynikov, Ilya B.
  10. Waves and determinants in the activity of Mergers and Acquisitions: The Case of Latin America By Lina M. Cortés; Diego A. Agudelo; Samuel Mongrut
  11. Firm Heterogeneity and Aggregate Welfare By Marc J. Melitz; Stephen J. Redding
  12. Milk Cost of Production Estimates for October, November, and December 2012 By Adam Rabinowitz; Rigoberto A. Lopez
  13. Setting reasonable performance targets for public service delivery By Newman, John L.; Azevedo, Joao Pedro
  14. The Effect of the European Regulation 1606/2002 on Market Efficiency: Early Empirical Evidence and Some Suggestions for Future Research and Policy-Making Discussion By Palea Vera

  1. By: Allan Collard-Wexler; Jan De Loecker
    Abstract: We measure the impact of a drastic new technology for producing steel -- the minimill -- on the aggregate productivity of U.S. steel producers, using unique plant-level data between 1963 and 2002. We find that the sharp increase in the industry's productivity is linked to this new technology, and operates through two distinct mechanisms. First, minimills displaced the older technology, called vertically integrated production, and this reallocation of output was responsible for a third of the increase in the industry's productivity. Second, increased competition, due to the expansion of minimills, drove a substantial reallocation process within the group of vertically integrated producers, driving a resurgence in their productivity, and consequently of the industry's productivity as a whole.
    Date: 2013–03
    URL: http://d.repec.org/n?u=RePEc:cen:wpaper:13-06&r=eff
  2. By: Christian Fons-Rosen; Sebnem Kalemli-Ozcan; Bent E. Sørensen; Carolina Villegas-Sanchez; Vadym Volosovych
    Abstract: We quantify the causal effect of foreign investment on total factor productivity (TFP) using a new global firm-level database. Our identification strategy relies on exploiting the difference in the amount of foreign investment by financial and industrial investors and simultaneously controlling for unobservable firm and country-sector-year factors. Using our well identified firm level estimates for the direct effect of foreign ownership on acquired firms and for the spillover effects on domestic firms, we calculate the aggregate impact of foreign investment on country-level productivity growth and find it to be very small.
    JEL: E32 F13 F36 O16
    Date: 2013–03
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:18920&r=eff
  3. By: Aizhen Li (University of Connecticut); Boris E. Bravo-Ureta (University of Connecticut); David K. Okello (National Semi-Arid Resources Research Institute (NaSARRI)); Carl M. Deom (University of Georgia); Naveen Puppala (New Mexico State University)
    Abstract: This study contributes to understanding the relationship between climatic variables and groundnut production in different farming systems in Uganda. Alternative production function models are estimated using pooled cross-sectional time series data at the district level. The models incorporate land area, indicators for farming systems, technological change, and either rainfall or the El Niño–Southern Oscillation (ENSO) effect as variables to account for climatic conditions. The data set includes 333 observations corresponding to 37 districts for 9 consecutive years, from 1992 to 2000. Analyses were performed using a Translog functional form and GARCH estimators. The results suggest that the partial elasticity of production for land is positive, high and significant, which is consistent with a priori expectations. Farming systems are also found to have a significant impact on output variability. Climatic conditions, measured by rainfall, have a non-significant effect; but, when the ENSO phenomenon is used instead a significant negative effect is detected particularly for the warm phase. An important and alarming finding is a marked negative rate of technological change revealing productivity losses over the time period studied.
    Keywords: Uganda, Groundnuts, Productivity, GARCH, Rainfall, ENSO
    Date: 2013–02
    URL: http://d.repec.org/n?u=RePEc:zwi:wpaper:17&r=eff
  4. By: Antoine Gervais
    Abstract: I develop and implement a methodology for obtaining plant-level estimates of product quality from revenue and physical output data. Intuitively, firms that sell large quantities of output conditional on price are classified as high quality producers. I use this method to decompose cross-plant variation in price and export status into a quality and an efficiency margin. The empirical results show that prices are increasing in quality and decreasing in efficiency. However, selection into exporting is driven mainly by quality. The finding that changes in quality and efficiency have different impact on the firm's export decision is shown to be inconsistent with the traditional iceberg trade cost formulation and points to the importance of per unit transport costs.
    Date: 2013–03
    URL: http://d.repec.org/n?u=RePEc:cen:wpaper:13-08&r=eff
  5. By: Isabel Tecu
    Abstract: What explains the location of industrial innovation? Economists have traditionally attempted to answer this question by studying firm-external knowledge spillovers. This paper shows that firm-internal linkages between production and R&D play an equally important role. I estimate an R&D location choice model that predicts patents by a firm in a location from R&D productivity and costs. Focusing on large R&D-performing firms in the chemical industry, an average-sized plant raises the firm’s R&D productivity in the metropolitan area by about 2.5 times. The elasticity of R&D productivity with respect to the firm’s production workers is almost as large as the elasticity with respect to total patents in the MSA, while proximity to academic R&D has no significant effect on R&D productivity in this sample. Other manufacturing industries exhibit similar results. My results cast doubt on the frequently-held view that a country can divest itself of manufacturing and specialize in innovation alone.
    Date: 2013–03
    URL: http://d.repec.org/n?u=RePEc:cen:wpaper:13-09&r=eff
  6. By: Zhang, Fan
    Abstract: The aggregate manufacturing energy intensity of 28 countries in Eastern Europe and Central Asia had declined by 35 percent during 1998-2008. This study reveals strong evidence of convergence: less efficient countries improved more rapidly and the cross-country variance in energy productivity narrowed over time. An index decomposition analysis indicates that energy intensities declined largely because of more efficient energy use rather than shifts from energy intensive to less intensive manufacturing activities. Income growth and energy price increases were the main drivers of the convergence. They dominated the impact of trade, which led to specialization in energy intensive industries.
    Keywords: Energy Production and Transportation,Environment and Energy Efficiency,Energy and Environment,Energy Demand,Climate Change Economics
    Date: 2013–03–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:6387&r=eff
  7. By: Anne Neumann; Maria Nieswand; Torben Schubert
    Abstract: Nonparametric efficiency analysis has become a widely applied technique to support industrial benchmarking as well as a variety of incentive- based regulation policies. In practice such exercises are often plagued by incomplete knowledge about the correct specifications of inputs and outputs. Simar and Wilson (2001) and Schubert and Simar (2011) propose restriction tests to support such specification decisions for cross-section data. However, the typical oligopolized market structure pertinent to regulation contexts often leads to low numbers of cross-section observations, rendering reliable estimation based on these tests practically unfeasible. This small-sample problem could often be avoided with the use of panel data, which would in any case require an extension of the cross-section restriction tests to handle panel data. In this paper we derive these tests. We prove the consistency of the proposed method and apply it to a sample of US natural gas transmission companies in 2003 through 2007. We find that the total quantity of gas delivered and gas delivered in peak periods measure essentially the same output. Therefore only one needs to be included. We also show that the length of mains as a measure of transportation service is non-redundant and therefore must be included.
    Keywords: Benchmarking models, network industries, nonparametric efficiency estimation, data envelopment analysis, testing restrictions, subsampling, Bootstrap
    JEL: C14 L51 L95
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1283&r=eff
  8. By: Krasnopjorovs, Olegs
    Abstract: Uneven economic growth during the recent years raise the question whether any factor of economic growth aside economic cycle fluctuations exists in Latvia. The objective of the Doctoral Thesis is, to assess the factors of economic growth in Latvia using econometric modelling techniques, and to solve various problems that arise when such techniques are used in Latvia's case. The Doctoral Thesis has identified the main factor of economic growth in Latvia – fixed capital accumulation. Although every euro of public investments on average contributes to the GDP growth at least as much as the euro of private investments, fixed capital accumulation in the private sector is the primary source of economic growth owing to its larger amount and faster growth. The positive impact of fixed capital accumulation on the average labour productivity level in the country is both direct (increasing capital to labour ratio) and indirect (allowing to use more productive technologies). It is fixed capital accumulation that was the main factor that determined the convergences process of Latvia's average income and labour productivity level to the respective indicator in the EU-15 (countries that entered EU before 2004). The Doctoral Thesis has identified the role of other factors of economic growth in Latvia as well as in other EU countries: labour, human capital and natural resource capacity in a country; changes of economic structure; world technical progress and country backwardness in respect to the world production frontier; regional aspects. The Doctoral Thesis showed that results of the research depend crucially on selection of a particular method, statistical data source and assumptions. Therefore, a considerable part of the research is devoted to the methodological features of statistical data as well as to the check of result stability in respect to alternative methods and assumptions.
    Keywords: economic growth, production function, non-parametric methods, growth accounting, real convergence
    JEL: C14 E22 O47
    Date: 2013–03–22
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:45500&r=eff
  9. By: Voskoboynikov, Ilya B. (Groningen University)
    Abstract: Russia is an important part of the world economy both now and in the past. Indeed, one would expect an abundance of studies on Russian economic development. In the past, growth and performance in planned economies vis-à-vis the Western world did attract much attention. These types of studies contributed to two revolutions of development thinking, which are the ?big push? approach based on success of Soviet industrialization in 1930-s and the unexpected collapse of the Soviet Union in 1991. However, recent performance of the Russian economy is less considered while much could be learned from studying the post-Soviet economic development. The key obstacle to the research in case of Russia is data availability. Detailed industrial data of labour, capital and output from early 1990-s onwards is not available both in the official statistics and in the literature. The present paper addresses this gap, providing detailed description of the newly developed dataset, which covers 34 industries in NACE 1.0 classification in 1995-2009. The paper also reports results of output growth rates decomposition into contributions of labour, capital and productivity (industrial growth accounting). Using more detailed data and better theoretical foundation it shows that the contribution of capital to economic growth in Russia is much more substantial that it has previously been reported in the literature until recently.
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:dgr:rugggd:gd-123&r=eff
  10. By: Lina M. Cortés; Diego A. Agudelo; Samuel Mongrut
    Abstract: This paper contributes to the current literature of mergers and acquisitions (M&As) by studying the existence of waves and the determinants of M&A activity in the economies of Argentina, Brazil, Chile, Colombia, Mexico and Peru. From a sample of 2,490 M&As announcements reported by Thomson One for these countries, and applying the methodology proposed by Harford (2005), evidence of M&A waves is found for the periods 1993-2002 and 2003-2010 as reported for other regions in various international studies. After controlling for economic and business environment variables, as well as for profitability and book-to-market variables at industry level, we find evidence in favor of the neoclassical theory as a main explanation for M&As, but not for the misvaluation effect. For this purpose, a Prais-Winsten data model with panel corrected standard errors (PCSE) is used, and the results are confirmed through a negative binomial panel data estimation.
    Date: 2012–12–02
    URL: http://d.repec.org/n?u=RePEc:col:000122:010658&r=eff
  11. By: Marc J. Melitz; Stephen J. Redding
    Abstract: We examine how firm heterogeneity influences aggregate welfare through endogenous firm selection. We consider a homogeneous firm model that is a special case of a heterogeneous firm model with a degenerate productivity distribution. Keeping all structural parameters besides the productivity distribution the same, we show that the two models have different aggregate welfare implications, with larger welfare gains from reductions in trade costs in the heterogenous firm model. Calibrating parameters to key U.S. aggregate and firm statistics, we find these differences in aggregate welfare to be quantitatively important (up to a few percentage points of GDP). Under the assumption of a Pareto productivity distribution, the two models can be calibrated to the same observed trade share, trade elasticity with respect to variable trade costs, and hence welfare gains from trade (as shown by Arkolakis, Costinot and Rodriguez-Clare, 2012); but this requires assuming different elasticities of substitution between varieties and different fixed and variable trade costs across the two models.
    JEL: F12 F15
    Date: 2013–03
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:18919&r=eff
  12. By: Adam Rabinowitz (University of Connecticut); Rigoberto A. Lopez (University of Connecticut)
    Date: 2013–02
    URL: http://d.repec.org/n?u=RePEc:zwi:outrep:13&r=eff
  13. By: Newman, John L.; Azevedo, Joao Pedro
    Abstract: Reaching agreement on a reasonable performance target is a challenge, with costs associated with getting it wrong. Attention in the literature has focused on the potential negative effects of gaming or of creaming. However, even if there is no gaming or creaming taking place, there can still be costs associated with setting a level of the performance target that is either too low or too high. On the one hand, if the negotiated performance target is too low, there is a strong risk that the target would be met without any change in behavior or performance from what would have been realized without a performance management system. In that case, there would be no benefit -- only the cost of covering the administrative costs associated with developing the monitoring and management systems. On the other hand, if the negotiated performance target is too high, there could also be significant costs. The exact nature of the costs depends on which one of two unattractive options the principal chooses to follow once it becomes apparent that the performance targets were set unrealistically high. If the principal chooses simply to waive any possible repercussions for the agents for not meeting the performance targets, this can undermine the credibility of the system. If the principal insists on holding agents to meeting the performance targets -- no matter how unrealistic they were -- this can breed resentment and adversely affect future productivity. This paper considers some approaches to target setting that have been used in the literature and proposes an approach based on the use of quantile regressions to construct a Characteristic Adjusted Performance distribution of performance to guide the selection of targets. The paper then presents two concrete examples of applications of this approach related to the setting of targets on School Test Scores and Improvement in Homicide rates in Police Districts in the State of Minas Gerais, Brazil.
    Keywords: E-Business,Tertiary Education,Teaching and Learning,Educational Sciences,Education For All
    Date: 2013–03–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:6385&r=eff
  14. By: Palea Vera (University of Turin)
    Abstract: The European Regulation 1606/2002 has required European firms listed on the European stock markets to prepare, starting from 2005, their consolidated financial statements according to the international accounting standards IAS/IFRS. The purpose of such a regulation is to ensure a high degree of transparency and comparability of financial statements and, hence, an efficient functioning of the European capital market. This paper investigates whether such a purpose can be considered as reached by focusing on the firms’ cost of capital. It shows that early evidence documents beneficial effects from the IAS/IFRS adoption, even though such effects vary due to differences still persisting in the European countries’ institutional frameworks and firms’ incentives. The paper also makes some suggestions for future research and policy-making discussion
    Date: 2013–03
    URL: http://d.repec.org/n?u=RePEc:uto:dipeco:201310&r=eff

This nep-eff issue is ©2013 by Angelo Zago. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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