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Causality between Technical and Allocative Efficiencies: An Empirical Testing

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 1 February 1992

Abstract

In production economics, one of the most interesting questions is that of the causal relationship between technical efficiency and allocative efficiency. This as yet remains a puzzle without a unique answer. There are a few theoretical analyses conceptualizing the relationship, but consensus has not yet been reached, and empirical tests are rare. Presents the empirical results of applying Granger’s (1969) and Sims’ (1972) causality tests using time series data on technical and allocative efficiencies of random samples of Indian farmers. These causality tests, with respect to technical and allocative effciences show that there is unidirectional causality from technical efficiency to allocative efficiency, and that the causative process is not bidirectional.

Keywords

Citation

Kalirajan, K.P. and Shand, R.T. (1992), "Causality between Technical and Allocative Efficiencies: An Empirical Testing", Journal of Economic Studies, Vol. 19 No. 2. https://doi.org/10.1108/01443589210018400

Publisher

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MCB UP Ltd

Copyright © 1992, MCB UP Limited