PRODUCTION RISK, TECHNICAL EFFICIENCY, AND PANEL-DATA

This paper demonstrates a method of measuring production risk and tech nical efficiency using panel data. A flexible (translog) production fu nction is used to represent the underlying production technology. The risk function appears multiplicatively with the production function an d it is flexible enough to accommodate both positive and negative marg inal risks with respect to the inputs. The model also includes feature s of the usual panel data models. A multi-step procedure is used to es timate the parameters of the model. Estimation of individual and time- specific technical efficiencies is also considered.