Globally flexible functional forms: The neural distance function

Michaelides, PG; Vouldis, AT; Tsionas, EG

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	https://dspace.lib.ntua.gr/xmlui/handle/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