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The Stata Journal
Volume 16 Number 4: pp. 900-916

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Production function estimation in Stata using the Ackerberg–Caves–Frazer method

Miguel Manjón
Research Centre on Industrial and Public Economics
Department of Economics
Rovira i Virgili University
Reus, Spain
Juan Mañez
Department of Applied Economics II and
Estructura de Recerca Interdisciplinar Comportament Econòmic i Social
Universitat de València
València, Spain
Abstract.  We present a new e-class command, acfest, that implements the method of Ackerberg, Caves, and Frazer (2015, Econometrica 83: 2411–2451) to estimate production functions. This method deals with the functional dependence problems that may arise in the methods proposed by Olley and Pakes (1996, Econometrica 64: 1263–1297) and, particularly, Levinsohn and Petrin (2003, Review of Economic Studies 70: 317–341) (implemented in Stata by Yasar, Raciborski, and Poi [2008, Stata Journal 8: 221–231] and Petrin, Poi, and Levinsohn [2004, Stata Journal 4: 113–123], respectively). In particular, the acfest command yields (nonlinear, robust) generalized method of moments estimates using a Mata function and two specification tests (Wald and Sargan–Hansen). After estimation, predict provides the estimated productivity of the firms in the sample.
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