Although a comprehensive framework for most of the theoretical foundations of duality has been available to economists since the seminal work by Shephard in 1953, empirical applications of duality have become popular mainly during the last ten years. The first empirical study which I am aware of that exploited duality theory is the one by Nerlove in 1963 which estimated a CobbDouglas cost funct...

This study explores the roles that three kinds of nonfinancial variables—people, patents and policies—play in generating firms’ near-term annual sales revenue. Due to data limitations on these variables for public companies, I use a rich and detailed set of information taken from surveys of private venture-backed firms conducted by VentureOne. By means of a CobbDouglas-type revenue model, I fin...

JULY/AUGUST 2003 27 The conventional wisdom concerning the interaction between economic development and financial system structure is that there are three stages (see, e.g., Gurley and Shaw, 1960, Goldsmith, 1969, and Allen and Gale, 2000). In this process of historical development, increasing per capita income and financial depth reinforce each other, and the transaction costs of establishing ...

The extent to which there are aggregate returns to scale at the level of aggregate production has important implications both for the types of shocks generating business cycles and for optimal policy. However, prior attempts to measure the extent of these returns using instrumental variable techniques have yielded quite imprecise estimates. In this article, we show that the production shocks im...

Differences in worker skill cause modest differences in wages within a country, but are associated with massive differences in productivity across countries (Hanushek and Kimko, 2000). I build upon Kremer’s (1993) O-ring theory of production to explain this stylized fact. I posit that there are two kinds of jobs: O-ring jobs where strategic complementarities to skill are large, and a diminishin...

Recognizing the critical role of agricultural sector in the overall growth as well as development performance, this study estimates total factor productivity (TFP) in Indian agriculture at state-level. Using Index of Agricultural Production as the measure of output, changes in TFP are estimated using non-parametric Sequential Malmquist TFP index. The TFP change is decomposed into efficiency cha...

The application of spatial analysis in assessing hospital costs has been largely ignored but is deserving of attention. Proximity to other hospitals can lead to spatial spillovers, and recognizing spatial effects can impact hospital economies of scale estimates. In this paper we estimate a variety of cost function models, using annual data for each of Connecticut’s 30 hospitals over a 10 year t...