COMPARING OLS AND RANK-BASED ESTIMATION TECHNIQUES FOR PRODUCTION ANALYSIS: AN APPLICATION TO GHANAIAN MAIZE FARMS

This paper introduces the rank-based estimation method to modelling the Cobb-Douglas production function as an alternative to the least squares approach. The intent is to demonstrate how a nonparametric regression based on a rank-based estimator can be used to estimate a Cobb-Douglas production function using data on maize production from Ghana. The nonparametric results are compared to common parametric specification using the ordinary least squares regression. Results of the study indicate that the estimated coefficients of the Cobb- Douglas Model using the Least squares method and the rank-based regression analysis are similar. Findings indicated that in both estimation techniques, land and Equipment had a significant and positive influence on output whilst agrochemicals had a significantly negative effect on output. Additionally, seeds which also had a negative influence on output was found to be significant in the robust rank-based estimation, but insignificant in the ordinary least square estimation. Both the least squares and rank-based regression suggest that the farmers were operating at an increasing returns to scale. In effect this paper demonstrate the usefulness of the rank-based estimation in production analysis.


Issue Date:
Apr 28 2017
Publication Type:
Journal Article
ISSN:
1789-221X
Language:
English
Published in:
APSTRACT: Applied Studies in Agribusiness and Commerce, Volume 10, Number 4-5
Page range:
130-125
JEL Codes:
Q18; D24; Q12 ; C1 ; C67
Note:
DOI: 10.19041/APSTRACT/2016/4-5/16




 Record created 2017-05-12, last modified 2017-05-12

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