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Globally flexible functional forms: The neural distance function

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dc.contributor.author Michaelides, PG en
dc.contributor.author Vouldis, AT en
dc.contributor.author Tsionas, EG en
dc.date.accessioned 2014-03-01T01:33:34Z
dc.date.available 2014-03-01T01:33:34Z
dc.date.issued 2010 en
dc.identifier.issn 0377-2217 en
dc.identifier.uri http://hdl.handle.net/123456789/20467
dc.subject Output distance function en
dc.subject Translog en
dc.subject Technical efficiency en
dc.subject ANN en
dc.subject LIML en
dc.subject.classification Management en
dc.subject.classification Operations Research & Management Science en
dc.subject.other STOCHASTIC FRONTIER MODELS en
dc.subject.other MULTILAYER FEEDFORWARD NETWORKS en
dc.subject.other DATA ENVELOPMENT ANALYSIS en
dc.subject.other DECISION-MAKING UNITS en
dc.subject.other TECHNICAL EFFICIENCY en
dc.subject.other PRODUCTIVITY GROWTH en
dc.subject.other IMPOSING CURVATURE en
dc.subject.other EUROPEAN RAILWAYS en
dc.subject.other BOOTSTRAP en
dc.subject.other INFERENCE en
dc.title Globally flexible functional forms: The neural distance function en
heal.type journalArticle en
heal.identifier.primary 10.1016/j.ejor.2010.02.013 en
heal.identifier.secondary http://dx.doi.org/10.1016/j.ejor.2010.02.013 en
heal.language English en
heal.publicationDate 2010 en
heal.abstract The output distance function is a key concept in economics. However, its empirical estimation often violates properties dictated by neoclassical production theory. In this paper, we introduce the neural distance function (NDF) which constitutes a global approximation to any arbitrary production technology with multiple outputs given by a neural network (NN) specification. The NDF imposes all theoretical properties such as monotonicity, curvature and homogeneity, for all economically admissible values of outputs and inputs. Fitted to a large data set for all US commercial banks (1989-2000), the NDF explains a very high proportion of the variance of output while keeping the number of parameters to a minimum and satisfying the relevant theoretical properties. All measures such as total factor productivity (TFP) and technical efficiency (TE) are computed routinely. Next, the NDF is compared with the Translog popular specification and is found to provide very satisfactory results as it possesses the properties thought as desirable in neoclassical production theory in a way not matched by its competing specification. (C) 2010 Elsevier B.V. All rights reserved. en
heal.publisher ELSEVIER SCIENCE BV en
heal.journalName EUROPEAN JOURNAL OF OPERATIONAL RESEARCH en
dc.identifier.doi 10.1016/j.ejor.2010.02.013 en
dc.identifier.isi ISI:000277873300018 en
dc.identifier.volume 206 en
dc.identifier.issue 2 en
dc.identifier.spage 456 en
dc.identifier.epage 469 en


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