Abstract
Standard productivity estimates contain a mixture of cost efficiency and demand conditions. I propose a method to identify the distribution of the demand shock using production data. Identification does not depend on functional form restrictions. It is also robust to dynamic demand considerations and flexible labor. In the parametric case, the ratio of intermediate inputs to the wage bill (input ratio) contains information about the magnitude of the demand shock. The method is tested using data from Spain that contains information on prices and demand conditions. Finally, we generate Monte Carlo simulations to evaluate the method’s performance and sensitivity. Supplementary materials for this article are available online.
| Original language | English |
|---|---|
| Pages (from-to) | 93-106 |
| Number of pages | 14 |
| Journal | Journal of Business and Economic Statistics |
| Volume | 38 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 2020 |
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Identifying demand shocks from production data. / Santos, Carlos Daniel.
In: Journal of Business and Economic Statistics, Vol. 38, No. 1, 2020, p. 93-106.Research output: Contribution to journal › Article
TY - JOUR
T1 - Identifying demand shocks from production data
AU - Santos, Carlos Daniel
PY - 2020
Y1 - 2020
N2 - Standard productivity estimates contain a mixture of cost efficiency and demand conditions. I propose a method to identify the distribution of the demand shock using production data. Identification does not depend on functional form restrictions. It is also robust to dynamic demand considerations and flexible labor. In the parametric case, the ratio of intermediate inputs to the wage bill (input ratio) contains information about the magnitude of the demand shock. The method is tested using data from Spain that contains information on prices and demand conditions. Finally, we generate Monte Carlo simulations to evaluate the method’s performance and sensitivity. Supplementary materials for this article are available online.
AB - Standard productivity estimates contain a mixture of cost efficiency and demand conditions. I propose a method to identify the distribution of the demand shock using production data. Identification does not depend on functional form restrictions. It is also robust to dynamic demand considerations and flexible labor. In the parametric case, the ratio of intermediate inputs to the wage bill (input ratio) contains information about the magnitude of the demand shock. The method is tested using data from Spain that contains information on prices and demand conditions. Finally, we generate Monte Carlo simulations to evaluate the method’s performance and sensitivity. Supplementary materials for this article are available online.
UR - http://www.scopus.com/inward/record.url?scp=85049579886&partnerID=8YFLogxK
U2 - 10.1080/07350015.2018.1458622
DO - 10.1080/07350015.2018.1458622
M3 - Article
VL - 38
SP - 93
EP - 106
JO - Journal of Business and Economic Statistics
JF - Journal of Business and Economic Statistics
SN - 0735-0015
IS - 1
ER -