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Article
A general approach for estimating the translog function in the presence of zero-value agruments
Economic Staff Paper Series
  • Quinn Weninger, Iowa State University
Document Type
Report
Publication Date
12-12-1998
Number
335
Abstract
The transcendental logarithmic (translog) function is a familiar choice in applied econometric work. It has been shown to exhibit superior approximations to unknown direct and indirect economic objective functions (Driscoll; Guilkey, Knox Lovell and Sickles; Stem). Fitting the translog function to consumer or firm level micro-data can encounter zero values for some function arguments. For example, a subset of consumers may not purchase strictly positive quantities of all goods in a choice set, or firms may be observed to employ a subset of available inputs in production. Because the natural logarithm is undefined at zero, the translog function cannot be estimated directly. To facilitate the logarithmic transformation, researchers typically modify zero-value arguments by either replacing them with arbitrarily small values or by applying the Box-Cox transformation.
Published As

This report is published in Food and Agriculture Organization of the United Nations

Citation Information
Quinn Weninger. "A general approach for estimating the translog function in the presence of zero-value agruments" (1998)
Available at: http://works.bepress.com/quinn-weninger/13/