Econometrics Seminar Series. Production function estimation using subjective expectations data
Published: 4 February 2026
20 February 2026. Professor Aureo de Paula, University College London
Professor Aureo de Paula, University College London
"Production function estimation using subjective expectations data"
Friday, 20 February. 15:00
Room 281, Adam Smith Business School.
Abstract
Standard methods for estimating production functions in the Olley and Pakes (1996) tradition require assumptions on input choices. We introduce a new method that exploits (increasingly available) data on a firm's expectations of its future output and inputs that allows us to obtain consistent production function parameter estimates while relaxing these input demand assumptions. In contrast to dynamic panel methods, our proposed estimator can be implemented on very short panels (including a single cross-section), and Monte Carlo simulations show it outperforms alternative estimators when firms' material input choices are subject to optimization error. Implementing a range of production function estimators on UK data, we find our proposed estimator yields results that are either similar to or more credible than commonly-used alternatives. These differences are larger in industries where material inputs appear harder to optimize. We show that TFP implied by our proposed estimator is more strongly associated with future jobs growth than existing methods, suggesting that failing to adequately account for input endogeneity may underestimate the degree of dynamic reallocation in the economy.
Bio
Aureo de Paula received his B.A. and M.Sc. in Economics from Pontificia Universidade Catolica—RJ (Brazil) in 1996 and 2000 respectively, he then went on to complete his M.A. and Ph.D. in Economics at Princeton University in 2002 and 2006. Prior to joining University College London (UCL), he was an associate professor (with tenure) at the University of Pennsylvania and has been a visiting faculty scholar at Northwestern and Harvard universities. Aureo is an elected Fellow of the Econometric Society and the International Association for Applied Econometrics and a Turing Fellow in 2021/23. He is an elected member of the Econometric Society Council and chairs its Latin America Regional Standing Committee from 2022 until 2025. He was a director for the Review of Economic Studies between 2020 and 2023. He was a Turing Fellow with the Alan Turing Institute (2021-2023) and has been in a board member for the Academic Steering Committee for EDePo (Institute for Fiscal Studies) (2019-2020), the Toulouse School of Economics Scientific Council (2022-2029) and the Econometric Society Dynamic Structural Econometrics (DES) Conferences and Summer Schools (since 2019).
Professor de Paula is affiliated with the Centre for Microdata Methods and Practice (UK), the Institute for Fiscal Studies (UK), CEPR and several other research groups worldwide. Since October 2025, he has been a Co-Director for the Centre for Microeconomic Analysis of Public Policy at the Institute for Fiscal Studies. Professor de Paula’s work has been featured in various academic publications and he has been associate editor for various academic journals (The Review of Economic Studies, Journal of Business and Economic Statistics, Econometrics Journal, Econometric Reviews and the Journal of Econometrics) and was a managing editor for The Review of Economics Studies and a co-editor at the Journal of Econometrics. Since July 2025, he is a co-editor of Econometrica. Aureo has won the Irving B. Kravis Award for Excellence in Undergraduate Teaching at the University of Pennsylvania and the Faculty Education Award at UCL (joint with Dunli Li).
For further information, please contact business-seminar-series@glasgow.ac.uk
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First published: 4 February 2026