Non-parametric tests of productive efficiency with errors-in-variables

Timo Kuosmanen, Thierry Post, Stefan Scholtes

Research output: Contribution to journalArticlepeer-review

14 Citations (Scopus)


We develop a non-parametric test of productive efficiency that accounts for errors-in-variables, following the approach of Varian. [1985. Nonparametric analysis of optimizing behavior with measurement error. Journal of Econometrics 30(1/2), 445-458]. The test is based on the general Pareto-Koopmans notion of efficiency, and does not require price data. Statistical inference is based on the sampling distribution of the L norm of errors. The test statistic can be computed using a simple enumeration algorithm. The finite sample properties of the test are analyzed by means of a Monte Carlo simulation using real-world data of large EU commercial banks.

Original languageEnglish
Pages (from-to)131-162
Number of pages32
JournalJournal of Econometrics
Issue number1
Publication statusPublished - Jan 2007


  • Data envelopment analysis (DEA)
  • Errors-in-variables
  • Extreme value theory
  • Hypothesis testing
  • Non-parametric production analysis

ASJC Scopus subject areas

  • Economics and Econometrics


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