Valentin Zelenyuk

On Testing Equality of Distributions of Technical Efficiency Scores

The challenge of the econometric problem in production efficiency analysis is that the efficiency scores to be analyzed are unobserved. Statistical properties have recently been discovered for a type of estimator popular in the literature, known as data envelopment analysis (DEA). This opens up a wide range of possibilities for well-grounded statistical inference about the true efficiency scores from their DEA estimates. In this paper we investigate the possibility of using existing tests for the equality of two distributions in such a context. Considering the statistical complications pertinent to our context, we consider several approaches to adapting the Li test to the context and explore their performance in terms of the size and power of the test in various Monte Carlo experiments. One of these approaches shows good performance for both the size and the power of the test, thus encouraging its use in empirical studies. We also present an empirical illustration analyzing the efficiency distributions of countries in the world, following up a recent study by Kumar and Russell (2002), and report very interesting results.

On aggregate Farrell efficiencies

In this paper we establish the fact that an industry maximal revenue is the sum of its firms’ maximal revenues. This fact enables us to discover conditions for aggregation of Farrell efficiencies.

Aggregation of Malmquist Productivity Indexes

In this paper we extend the work of Fare and Zelenyuk (2003) to find a theoretically justified method of aggregating Malmquist Productivity Indexes over individual decision making units (firms, countries, etc.) into a group Malmquist Productivity Index. We also consider the aggregation of decomposed parts of the Malmquist Productivity Index to obtain a decomposition of the Malmquist Productivity Index for a particular group.

Technological Change and Transition: Relative Contributions to Worldwide Growth During the 1990s

In this paper we used the procedures developed in the Kumar and Russell (2002) growth-accounting study to examine cross-country growth during the 1990s. Using a data set comprising developed, newly industrialized, developing and transitional economies, we decomposed the growth of output per worker into components attributable to technological catch-up, technological change and capital accumulation. In contrast to the study by Kumar and Russell (2002), which concluded that capital deepening was the major force of growth and change in the world income per worker distribution over the 1965-1990 period, our analysis showed that, during the 1990s, the major force in the further divergence of the rich and the poor was due to technological change, whereas capital accumulation played a lesser and opposite role. In further contrast, we found that efficiency changes (insignificantly) led (on average) to regress rather than progress. Finally, although on average we found that transitional economies performed similar to the rest of the world, the procedure was able to discover some interesting patterns within the set of transitional countries.

Comparative analysis of banking production frameworks in eastern european financial markets

This paper performs comparative analysis of the non-radial Russell output technical efficiency measures of 13 Eastern European banking systems assuming a banking production with risk as an undesirable output and where output components can be negative. This is analysed utilizing three modelling specifications; the intermediation, production and profit methodologies. Along with distribution and inter-distribution mobility analysis of the efficiency scores across alternative methodologies, we also estimate and statistically compare the distributions of estimated efficiency scores using the bootstrap-based Simar-Zelenyuk-adapted-Li test. The results suggest that although the efficiency levels differ across the approaches, change in positions of the banks relative to the mean is not substantial across the three methodologies.

Aggregation bias and its bounds in measuring technical efficiency

The discussion about the bias due to input (or output) aggregation in efficiency measurement based on data envelopment analysis, recently revisited by Tauer (2001) and Färe and Zelenyuk (2002) is continued. Attention is focused on the direction and the bounds of the aggregation bias.

Input aggregation and technical efficiency

This paper defines the notion of unbiased aggregation of inputs and provides a necessary and sufficient condition for this to apply.

A scale elasticity measure for directional distance function and its dual: Theory and DEA estimation

In this paper we introduce a scale elasticity measure based on directional distance function for multi-output-multi-input technologies and explore its fundamental properties. Specifically, we derive necessary and sufficient condition for equivalence of the scale elasticity measure based on the directional distance function with the input oriented and output oriented scale elasticity measures. We also establish duality relationship between the scale elasticity measure based on the directional distance function with a scale elasticity measure based on the profit function. This theoretical result is valuable for empirical researchers as it provides a testable analytical condition for when (and only when) the alternative primal and dual definitions of scale elasticity for multi-output-multi-input technologies yield equivalent conclusions about economies or diseconomies of scale.

Efficiency and technological change in health care services in Ontario

This paper presents productivity measurement results for hospital services using panel data for Ontario hospitals between 2003 and 2006. The study uses the Malmquist Productivity index (MPI) obtained through the application of Data Envelopment Analysis (DEA) which is decomposed into efficiency change (ECH), i.e., movement towards the best practice frontier and technological change (TCH), i.e., movement of the frontier itself (Fare et al. [12]). The study also uses kernel density estimation techniques for analysis of efficiency distributions of the productivity scores and their components across different types of hospitals (e.g. small /large and rural /urban) and over time. Our results suggest that in addition to average productivity it is important to examine distributions of productivity and of its components which we find differs by hospital type and over time. We find that productivity growth occurred mostly through improvement in technology and in spite of declining efficiency. The results provide useful insight into the underlying mechanisms of observed changes in overall productivity, in technological change and in technical efficiency change in this vital sector of the health care market.

Aggregation of Cost Efficiency: Indicators and Indexes Across Firms

In this paper we ask whether cost efficiency Farrell indexes (which are ratio measures) and cost efficiency indicators (which are difference measures) can be aggreaga ted from firm to industry. The answer is positve; however, if we wish to aggregate the technical and allocative efficiency components, the answer is not so simple, especially for the index measures. We conclude that the indicator approach is preferred to the index approach with respect to aggregation.