Efficiency estimation and error decomposition in the stochastic frontier model: a Monte Carlo analysis

Article Abstract:

A Monte Carlo method was used to test the validity of the stochastic frontier cross-sectional model. By employing simulated data, the performance of several stochastic frontier models and parametric deterministic model was assessed according to the correctly specified stochastic frontier model. The findings showed that the deterministic model outperformed the stochastic frontier. Moreover, the performance of the stochastic frontier model is sensitive to sample size, mis-specification and the amount of measurement error relative to inefficiency.

Stochastic analysis, Monte Carlo method, Monte Carlo methods

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Nonparametric analysis of educational costs

Article Abstract:

The assumption of cost minimization may not be suitable for long-term analysis of public sector applications where officials may have alternative goals, such as excess staff or larger budgets. A study therefore developed a flexible nonparametric methodology to analyze costs and cost efficiency in the provision of public sector services without imposing the cost minimizing assumption and applied it to a sample of 584 New York school districts.

Public Finance Activities, Public Finance-State, Cost Accounting, Public finance, Data envelopment analysis, Municipal services, School districts, State finance

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Measuring technical efficiency

Article Abstract:

The methods used to analyze production efficiency are discussed. Additional information on the Russell and Farrell measures used to evaluate technical efficiency is also included.

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