Estimating Production Functions Using Inputs to Control for Unobservables

摘要: We introduce a new method for conditioning out serially correlated unobserved shocks to the production technology by building ideas first developed in Olley and Pakes (1996). show how use investment control correlation between input levels firm-specific productivity process. prove that like investment, intermediate inputs (those which are typically subtracted value-added function) can also solve this simultaneity problem. highlight three potential advantages using an approach relative investment. Our results indicate these empirically important.