EFFICIENCY MEASUREMENT IN SWEDISH DAIRY FARMS - AN APPLICATION OF ROTATING PANEL-DATA, 1976-88

In this paper we introduce a new specification of technical inefficien cy in panel data models. First, the overall technical inefficiency is decomposed into a persistent component and a residual component. Secon d, a multistep procedure is used to estimate the parameters of the pro duction function as well as persistent and residual technical ineffici ency. The advantage of this multistep procedure is that the parameter estimates are robust to distributional assumptions on the error compon ents. Distributional assumptions are required in the final stage to es timate the residual component of technical inefficiency. The model is used to examine technical efficiency in Swedish dairy farms during the period 1976 to 1988.