Nigusie, Misgan Desale2025-03-102025-03-102024-09Nigusie, Misgan Desale . (2024). “Normal beta exponential stochastic frontier model: Maximum simulated likelihood approach”. Portuguese Economic Journal, Vol 23, (3): 489–5041617-982X (print)http://hdl.handle.net/10400.5/99123This paper considers the beta exponential distribution as a distribution function of inefficacy score in a stochastic frontier model. The beta exponential distribution is a three-parameter distribution, and it is more flexible than commonly used probability density functions in a stochastic frontier model (SFM). This new model, a “Normal Beta Exponential SFM”, nests another five SFMs. This paper presents a simulated log-likelihood function and simulated inefficiency estimator of a normal-beta exponential SFM, a closed form log-likelihood function and closed form inefficiency estimator of a normal-weighted exponential SFM, and an empirical study using a normal-beta exponential SFM. In our empirical study, we have used a likelihood ratio test to compare the performance of SFMs and a normal-beta exponential SFM fits the data better than other nested special case SFMs. Furthermore, the empirical result shows that parameters of a normal-beta exponential SFM can be estimated with less standard error or high certainty than a normal-gamma SFM.engBeta exponential distributionStochastic frontier modelSimulated likelihoodHalton sequencesjournal articlehttps://doi.org/10.1007/s10258-023-00247-01617-9838 (electronic)