Re: st: Calculating Technical efficiency

[Federico Belotti <f.belotti@gmail.com>]

Assuming that you are using the official -frontier- command for cross-sectional SF models through

frontier y x, dist(t) cm(z)

you are simultaneously estimating a SF production model and a conditional mean model in which 
the mean of the truncated-normally distributed inefficiency is modeled as a linear function of a specific set of covariates.
In this case, the postestimation command

predict te, te

will automatically compute unit technical efficiencies using the Batese and Coelli (1988) estimator in which the 
conditional mean model is explicitly taken into account. The same is true in the case of technical inefficiency using

predict u, u

For more details, take a look at the Stata [R] Base Reference manual, chapter "frontier — Stochastic frontier models", 
section "Methods and formulas".

Best,
Federico

On Jul 8, 2013, at 8:22 AM, Nabin Kafle wrote:

> I want to calculate the technical efficiency from stochastic frontier.
> I want to include the exogeneous variables time and price as directly
> as a regressor i.e assume the exogenous variables affect the shape of
> the production technology. Now after running the frontier command, i
> can use "predict ...,te" to calculate the efficiency net of the
> exogenous variable. How can I calculate the gross inefficiency?
> 
> Thanks in advance for your kind help
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-- 
Federico Belotti, PhD
Research Fellow
Centre for Economics and International Studies
University of Rome Tor Vergata
tel/fax: +39 06 7259 5627
e-mail: federico.belotti@uniroma2.it
web: http://www.econometrics.it


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