OECD countries' energy based development performances' measurement by stochastic frontier analysis

Stochastic frontier analysis is a method serving to measure production units? efficiency by considering random events beyond the control of these units too.In this thesis study, 29 OECD countries? energy based development performances have been measured by stochastic frontier analysis. Over the period 2001 to 2008, a panel data set has been used for this analysis. For development performance two models have been considered and for each of these models, sub models have been created by including climate variable or excluding it. Different assumptions on inefficiency term in these sub models have been made (half-normal and time invariant, truncated-normal and time invariant, half-normal and time variant, truncated-normal and time variant). All of the assumed models? parameters and the countries? technical efficiency in terms of these models have been estimated by FRONTIER 4.1 computer program. 29 OECD countries have been ranked according to their estimated technical efficiency. Finally, correlate events among efficiency rankings obtained by using all of the assumed models have been compared. Although for 29 OECD countries? energy based development performance, different assumptions on inefficiency term have been made and climate variable considered to influence energy consumption has been included or excluded these models, it has been concluded that the countries? efficiency rankings are very similar.Key Words: Performance, Efficiency, Energy, Stochastic frontier analysis