The Research On The Varying Coefficients Production Frontier And Its Application

One of problem unsettled in the analysis of production function is how to choose the appropriate form of function. The frontier production function, a parametric function of any form, can be estimated by sample data. This study shows that the projected panel data, which is the inputs and relative exponential maximum output data set, obtained by conducting the data envelopment analysis with the log inputs and output, is approximately piecewise Cobb-Douglas under a certain assumption. Thus the expression of production function can be determined preliminarily without violation of its economic implication and no further test should be followed.The Cobb-Douglas production function can be accumulated to be an aggregate production function if the marginal products are all equal across industries or countries. But this is not always satisfied since the technology developed and production technique employed varies from one industry (country) to another. In this study, the technical coefficients are defined so as to capture the difference in technology and production techniques across industries (countries). Then, the varying coefficients regression model is applied in estimating aggregate production function and the technical coefficients with the projected panel data. Thus, the derived best production practice, which exhibits the difference in technology and production technique across industries (countries), could be used more effectively in the field of macroeconomics.With the SAS software, we regress the cross-section data for 33 industries in 2000, and the panel data from 2000 to 2003. Then we can estimate the technical coefficient by using the varying coefficients frontier model, and give some suggestion for our country.