An econometric methodology is developed for nonparametric estimation of concave production technologies. The methodology, bases on the priciple of maximum likelihood, uses entropic distance and concvex programming techniques to estimate production functions.

We examine whether inflation targeting should be regarded as optimal. Targeting inflation implies (undesirably) that price level variance tends to infinity: we produce some evidence from both a representative agent model and a long-used forecasting model that, once an endogenous indexation...