Essays on Efficiency Measurements

The unifying theme of this dissertation is the measurement of production efficiency, covering both parametric and non-parametric approaches to efficiency assessment. The first chapter considers the estimation of a fixed-effect panel data model with disturbances that are spatially correlated, based on a geographic or economic proximity measure. For when the time dimension is small (the usual panel data case), the study develops a generalized moments estimation approach based on a cross-sectional model from Kelejian and Prucha (1999). This approach is then applied in a stochastic frontier framework to a panel of Indonesian rice farms. Within this framework, spatial correlations are based on geographic proximity, and represent productivity shock spillovers across the production units. Using a Moran I test statistic, the first chapter empirically demonstrates that productivity shock spillovers may exist in this (and perhaps other) data sets, and that these spillovers have profound effects on technical efficiency estimation. The second chapter represents a logical extension of the first as it theoretically develops a random effect panel data model that accounts for spatial correlation across disturbance terms. The model is then applied within the framework of production frontier to the same data set of..