Heterogeneities in stochastic production frontier models with application to world health organization’s panel data.

• Main Authors: Sun, Gongshi., Wang, Yi.
• Other Authors: School of Humanities and Social Sciences
• Format: Final Year Project
• Language: English
• Published: 2012
• Subjects: DRNTU::Social sciences::Economic theory::Microeconomics
• Online Access: http://hdl.handle.net/10356/48845
• Institution: Nanyang Technological University

Though there exist various researches on how to separate heterogeneity and inefficiency in stochastic frontier analysis, due to the ambiguity in definitions, it is difficult, if not impossible, to separate the two entirely without strong distribution assumptions. This study will walk through existing literature on this topic, then redefine inefficiency and model it as a function of heterogeneity. Through the analysis of World Health Organization’s panel data set on health system performance and comparison of results against several previous researches, this study suggests strong evidence that inefficiency should be modeled as time variant and time variation is correlated with heterogeneity.