Testing for separable functional structure using temporary equilibrium models (Q1085028): Difference between revisions

This article presents empirical estimation of translog cost functions and statistical testing for separability assumptions, when the behavioral units are permitted to be in temporary equilibrium. All theoretical constraints on the translog cost functions are imposed during estimation. The theoretical constraints are expressed as equalities and inequalities on the parameters and variables in the model. Likelihood ratios are used as the basis for the best. The methodologies are applied to the estimation for the two-digit SIC U.S. manufacturing industries. The empirical results provide less support for the existence of input separability in two-digit manufacturing industries than previous studies.