Measuring productivity and efficiency: a Kalman filter approach

Duygun, Meryem and Kutlu, Levent and Sickles, Robin (2016) Measuring productivity and efficiency: a Kalman filter approach. Journal of Productivity Analysis, 46 (2). pp. 155-167. ISSN 1573-0441

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Abstract

In the Kalman filter setting, one can model the inefficiency term of the standard stochastic frontier composed error as an unobserved state. In this study a panel data version of the local level model is used for estimating time-varying efficiencies of firms. We apply the Kalman filter to estimate average efficiencies of U.S. airlines and find that the technical efficiency of these carriers did not improve during the period 1999-2009. During this period the industry incurred substantial losses, and the efficiency gains from reorganized networks, code-sharing arrangements, and other best business practices apparently had already been realized.

Item Type: Article
Additional Information: The final publication is available at Springer via http://dx.doi.org/10.1007/s11123-016-0477-z
Keywords: Kalman filter, Panel data, Airline productivity
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > Nottingham University Business School
Identification Number: 10.1007/s11123-016-0477-z
Depositing User: Howis, Jennifer
Date Deposited: 16 Mar 2017 11:55
Last Modified: 16 Mar 2017 11:58
URI: http://eprints.nottingham.ac.uk/id/eprint/41338

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