SNQ Profit function: Weights of prices for normalization

Description

Returns a vector of weights to normalize prices on a Symmetric Normalized Quadratic (SNQ) Profit function.

Usage

snqProfitWeights( priceNames, quantNames, data, method = "DW92", base = 1 )

Arguments

Details

If argument method is 'DW92' the method of Diewert and Wales (1992) is applied. They predetermine the weights by

θ_{i} = frac{ displaystyle ≤ft | overline{x}_{i} ight| p_{i}^{0} }{ displaystyle ∑_{i=1}^{n} ≤ft| overline{x}_{i} ight| p_{i}^{0}}

Defining the scaled netput quantities as widetilde{x}_{i}^{t} = x_{i}^{t}cdot p_{i}^{0} we get following formula:

θ_{i} = frac{ displaystyle ≤ft| overline{ widetilde{ x } }_{i} ight|}{ displaystyle ∑_{i=1}^{n} ≤ft| overline{ widetilde{ x } }_{i} ight|}

The prices are scaled that they are unity in the base period or - if there is more than one base period - that the means of the prices over the base periods are unity. The argument base can be either
(a) a single number: the row number of the base prices,
(b) a vector indicating several observations: The means of these observations are used as base prices,
(c) a logical vector with the same length as the data: The means of the observations indicated as 'TRUE' are used as base prices, or (d) NULL: prices are not scaled.

Author(s)

Arne Henningsen

See Also

snqProfitEst.

Examples

   data( germanFarms, package = "micEcon" )
   germanFarms$qOutput   <- germanFarms$vOutput   / germanFarms$pOutput
   germanFarms$qVarInput <- -germanFarms$vVarInput / germanFarms$pVarInput
   germanFarms$qLabor    <- -germanFarms$qLabor
   priceNames <- c( "pOutput", "pVarInput", "pLabor" )
   quantNames <- c( "qOutput", "qVarInput", "qLabor" )
   snqProfitWeights( priceNames, quantNames, germanFarms )

Results