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Technology Modeling: Curvature is not Sufficient for Regularity

Author

Listed:
  • William Barnett

    (Department of Economics, University of Kansas)

  • Milka Kirova

    (Washington University in St.Louis)

  • Meenakshi Pasupathy

    (Washington University in St.Louis)

Abstract
We estimate the generalized McFadden (generalized quadratic) production function by GMM for a manufacturing firm that uses risky monetary assets among its inputs and for a bank that produces risky monetary assets as outputs. We impose curvature globally and monotonicity at a point, as is the capability of the model. We find that monotonicity is violated at many data points away from the one point at which it is imposed. We conclude that the model's inability to impose monotonicity globally is a serious limitation, despite the ability to impose curvature globally.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • William Barnett & Milka Kirova & Meenakshi Pasupathy, 2012. "Technology Modeling: Curvature is not Sufficient for Regularity," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201214, University of Kansas, Department of Economics, revised Sep 2012.
    • Handle: RePEc:kan:wpaper:201214
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