Journal Article

Variations on Invariance or Some Unpleasant Nonparametric Arithmetic

James A. Chalfant and Bin Zhang

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 79, issue 4, pages 1164-1176
Published in print November 1997 | ISSN: 0002-9092
Published online November 1997 | e-ISSN: 1467-8276 | DOI: http://dx.doi.org/10.2307/1244273
Variations on Invariance or Some Unpleasant Nonparametric Arithmetic

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  • Technological Change; Research and Development
  • Econometric Modelling
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The nonparametric approach to production or demand analysis involves testing data for compatibility with restrictions from theory. This avoids reliance on particular functional forms. When the data are not consistent with utility or profit maximization, adjustments in the data using linear programming can restore consistency. Such adjustments have been interpreted as taste changes or measures of technical change and technical change bias. This paper describes nonparametric approaches and shows that the programming methods that have been used yield results that are not invariant to the scaling of prices and quantities. A solution is proposed that solves the invariance problem.

Keywords: nonparametric demand analysis; productivity; taste change; technical change; C510; O330; Q110

Journal Article.  0 words. 

Subjects: Technological Change; Research and Development ; Econometric Modelling ; Agricultural Economics

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