Template-Type: ReDIF-Article 1.0
Author-Name:  Richard E. Just
Author-Email: rjust@arec.umd.edu
Author-Workplace-Name: Department of Agricultural and Resource Economics, University of Maryland, College Park Maryland, USA.
Author-Name:  Rulon D. Pope
Author-Email: rulon_pope@byu.edu
Author-Workplace-Name: Department of Economics, Brigham Young University, Provo, Utah, USA.
Title: Cost Function Estimation with Proportional Errors in Variables
Abstract:  A model with proportional errors in variables arising naturally in microeconomics is considered. Unlike the classical additive errors case, all OLS parameter estimates exhibit attenuation bias that does not depend on the limiting distribution of the data. The distribution of OLS estimators is developed. With no intercept, a simple correction of OLS based on mean predictions is identified that is consistent and asymptotically normal. With an intercept, a readily available additional moment based on sample data identifies the parameters. In neither case are additional restrictions or use of extra-sample data as instruments required as for common errors-in-variables methods. 
Classification-JEL: C13, C20, C80
Keywords: Errors in variables, Proportional errors, Estimation
Journal: International Econometric Review
Pages: 59-81
Volume: 4
Issue: 2
Year: 2012
Month: September
File-URL: http://www.era.org.tr/makaleler/11090067.pdf
File-Format: Application/pdf
Handle: RePEc:erh:journl:v:4:y:2012:i:2:p:59-81