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IDENTIFICATION AND THE INFLUENCE FUNCTION OF OLLEY AND PAKES’ (1996) PRODUCTION FUNCTION ESTIMATOR

Published online by Cambridge University Press:  22 July 2022

Jinyong Hahn ,
Zhipeng Liao  and
Geert Ridder
Jinyong Hahn
Affiliation:
University of California, Los Angeles
Zhipeng Liao*
Affiliation:
University of California, Los Angeles
Geert Ridder
Affiliation:
University of Southern California
*
Address correspondence to Zhipeng Liao, Department of Economics, University of California, Los Angeles, Los Angeles, CA 90095-1477, USA; e-mail: [email protected].
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Abstract

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In this paper, we reconsider the assumptions that ensure the identification of the production function in Olley and Pakes (1996, Econometrica 64, 1263–1297). We show that an index restriction plays a crucial role in the identification, especially if the capital stock is measured by the perpetual inventory method. The index restriction is not sufficient for identification under sample selectivity. The index restriction makes it possible to derive the influence function and the asymptotic variance of the Olley–Pakes estimator.

Type
ARTICLES
Information
Econometric Theory , Volume 39 , Issue 5 , October 2023 , pp. 1044 - 1066
Copyright
© The Author(s), 2022. Published by Cambridge University Press

Footnotes

We thank the Editor (Peter C.B. Phillips), the Co-Editor (Matias D. Cattaneo), and two anonymous referees for helpful comments and suggestions that have improved the quality of the paper. We also thank the seminar participants at NYU, Princeton, and Penn State University for their helpful comments.

References

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