Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries



Table B Continued: Production Function Estimation - Specification Testing

Sector 27

βki = 0

ωt = 0

μ = 0

γ = 0

LL Restricted

-833

-821

-819

-847

LL unrestricted

-821

-817

-817

-821

Test Statistic

23.86

9.36

4.10

51.44

Result

Reject null (1%)

Reject null (5%)

Reject null (5%)

Reject null (1%)

Sector 28

βki = 0

ω = о

μ = 0

γ = 0

LL Restricted

-4,839

-4,794

-4,797

-5,014

LL unrestricted

-4,794

-4,790

-4,790

-4,790

Test Statistic

90.55

7.40

14.00

450.22

Result___________

Reject null (1%)

Reject null (10%)

Reject null (1%)

Reject null (1%)

Sector 29

βki = 0

ω = о

μ = 0

γ = 0

LL Restricted

-1,505

-1,499

-1,497

-1,618

LL unrestricted

-1,499

-1,496

-1,496

-1,496

Test Statistic

11.89

6.92

3.13

245.49

Result

Reject null (1%)

Reject null (10%)

Reject null (10%)

Reject null (1%)

Sector 31

βki = 0

ω = о

μ = 0

γ = 0

LL Restricted

-915

-894

-895

-962

LL unrestricted

-894

-894

-894

-895

Test Statistic

40.78

1.59

1.18

134.48

Result___________

Reject null (1%)

Do not reject

Do not reject

Reject null (1%)

Sector 32

βki = 0

ω = о

μ = 0

γ = 0

LL Restricted

-436

-424

-426

-473

LL unrestricted

-424

-421

-424

-424

Test Statistic

24.75

5.30

3.91

99.79

Result

Reject null (1%)

Do not reject

Reject null (5%)

Reject null (1%)

Sector 33

βki = 0

ω = о

μ = 0

γ = 0

LL Restricted

-215

-215

-217

-241

LL unrestricted

-214

-213

-215

-215

Test Statistic

1.38

4.77

4.58

52.46

Result___________

Do not reject

Do not reject

Reject null (5%)

Reject null (1%)

Sector 34

βki = 0

ω = о

μ = 0

γ = 0

LL Restricted

-780

-735

-736

-794

LL unrestricted

-735

-732

-735

-736

Test Statistic

90.32

4.36

2.57

116.53

Result

Reject null (1%)

Do not reject

Do not reject

Reject null (1%)

Sector 35

βki = 0

ω = о

μ = 0

γ = 0

LL Restricted

-1,258

-1,251

-1,255

-1,343

LL unrestricted

-1,251

-1,242

-1,242

-1,242

Test Statistic

14.08

18.47

25.67

201.72

Result___________

Reject null (1%)

Reject null (1%)

Reject null (1%)

Reject null (1%)

Sector 36

βki = 0

ω = о

μ = 0

γ = 0

LL Restricted

-3,655

-3,639

-3,641

-3,796

LL unrestricted

-3,639

-3,629

-3,629

-3,629

Test Statistic

32.36

19.45

23.52

333.37

Result

Reject null (1%)

Reject null (1%)

Reject null (1%)

Reject null (1%)

Tests are re-run for the restrictions βkl = 0 and ωt = 0 imposing the restriction μ= 0 . The results are confirmed.

44



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