## Estimating translog cost function

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stevenessex
Posts: 2
Joined: Thu Jul 06, 2017 12:44 pm

### Estimating translog cost function

Hi everyone: so i am trying to calculate the translong cost function in order to obtain marginal cost for a Lerner Index. However, I am struggling with the interpreting of the function itself into eviews. I have attached a word document of my translog function and all the variables.
Any help at all would be appreciated.
Attachments
my dissertation.docx

stevenessex
Posts: 2
Joined: Thu Jul 06, 2017 12:44 pm

### Re: Estimating translog cost function

ln(total_bank_cost)=c+c(2)*(total_earnings_assets)*ln(total_earnings_assets)+c(3)*.5*(total_earnings_assets)*ln(total_earnings_assets)^2+c(4)*wd_price_of_deposits_*ln(wd_price_of_deposits_)+c(5)*wk_price_of_physical_cap)*ln(wk_price_of_physical_cap)+c(6)*wl_price_of_labour_*ln(wl_price_of_labour_)+ln(total_earnings_assets)*ln(wd_price_of_deposits_)+ln(total_earnings_assets)*ln(wl_price_of_labour_)+ln(total_earnings_assets)*ln(wk_price_of_physical_cap)+ln(wd_price_of_deposits_)*ln(wk_price_of_physical_cap)+ln(wd_price_of_deposits_)*ln(wl_price_of_labour_)+ln(wk_price_of_physical_cap)*ln(wd_price_of_deposits_)+ln(wk_price_of_physical_cap)*ln(wl_price_of_labour_)+ln(wl_price_of_labour_)*ln(wd_price_of_deposits_)+ln(wl_price_of_labour_)*ln(wk_price_of_physical_cap)+ln(wl_price_of_labour_)^2+ln(wd_price_of_deposits_)^2+ln(wk_price_of_physical_cap)^2
would this be correct?

EViews Gareth
Fe ddaethom, fe welon, fe amcangyfrifon
Posts: 11875
Joined: Tue Sep 16, 2008 5:38 pm

### Re: Estimating translog cost function

log not ln.

Rakan90Aldomy
Posts: 1
Joined: Thu Sep 28, 2017 1:01 am

### Re: Estimating translog cost function

I am using same as stevenessex to estimating translog cost function and i tried to run this equation
log(total_cost)=c(1)+c(2)*(q)*log(q)+c(3)*0.5 (q)*log(q)^2+c(4)*w1_deposit_*log(w1_deposit_)+c(5)*w3_fixed_capital_)*log(w3_fixed_capital_)+c(6)*w2_labor_*log(w2_labor_)+log(q)*log(w1_deposit_)+log(q)*log(w2_labor_)+log(q)*log(w3_fixed_capital_)+log(w1_deposit_)*log(w3_fixed_capital_)+log(w1_deposit_)*log(w2_labor_)+log(w3_fixed_capital_)*log(w1_deposit_)+log(w3_fixed_capital_)*log(w2_labor_)+log(w2_labor_)*log(w1_deposit_)+log(w2_labor_)*log(w3_fixed_capital_)+log(w2_labor_)^2+log(w1_deposit_)^2+log(w3_fixed_capital_)^2

and it gave me "syntax error" and how can i calculate for each bank and each year?

EViews Gareth
Fe ddaethom, fe welon, fe amcangyfrifon
Posts: 11875
Joined: Tue Sep 16, 2008 5:38 pm

### Re: Estimating translog cost function

Go through and make sure you're not missing any * or + signs.

araleemi
Posts: 1
Joined: Wed Sep 12, 2018 12:34 am

### Re: Estimating translog cost function

Hey Gareth
I am trying to estimate the following with three inputs that are capital, labor and funding and two outputs that are loans and deposits
I am running the follo
Untitled.jpg (41.07 KiB) Viewed 1287 times
wing system

log(tc)=c(1)+c(2)*loans*log(loans)+c(3)*0.5*(loans)*log(loans)^2+c(4)*w1*log(w1)+c(5)*w3*log(w3)+c(6)*w2*log(w2)+log(loans)*log(w1)+log(loans)*log(w2)+log(loans)*log(w3)+log(w1)*log(w3)+log(w1)*log(w2)+log(w3)*log(w1)*log(w2)+log(w3)*log(w1)+log(w3)*log(w2)+log(w2)*log(w1)+log(w2)*log(w3)+log(w2)^2+log(w1)^2+log(w3)^2

log(tc)=c(7)+c(8)*deposits*log(deposits)+c(9)*0.5*(deposits)*log(deposits)^2+c(10)*w1*log(w1)+c(11)*w3*log(w3)+c(12)*w2*log(w2)+log(deposits)*log(w1)+log(deposits)*log(w2)+log(deposits)*log(w3)+log(w1)*log(w3)+log(w1)*log(w2)+log(w3)*log(w1)*log(w2)+log(w3)*log(w1)+log(w3)*log(w2)+log(w2)*log(w1)+log(w2)*log(w3)+log(w2)^2+log(w1)^2+log(w3)^2

I am not sure should I run the two separately or in combination, as I also need to pose the symmetry restrictions but does not know on which coefficient?

After running this system I am not sure how to proceed to the next step of extracting the marginal cost