Dear Stata users,


I am using Stata 15 and I am quite new in using this software. I am working on a profit and cost efficiency analyses of 309 tourists firms for period 2008-2017. I have chosen to apply the Battese & Coelli(1995) model (Translog function). I have gone through the Stata journal by Belotti et al. (2013) as well. I took the ln of some of the inputs and outputs. The variables that I have chosen are: lnTotal Costs and EBIT as dependent variables, respectively for cost and profit efficiency function; independent output variable: LnSales Revenue; independent input variables: lnLabour costs, LnMaterial costs, LnPhysical Capital costs; explanatory variables of inefficiencies: 3*category, 4*category, 5*category and Tourism Specialization. Every time I try and run the model of Cost efficiency I receive these results:

Code:
sfpanel lTC lSR lpL lpM lpPhC Year, model(bc95) dist(tn) emean(category3 category4 category5 Tourismspecialization ) ort(o)
These are some results.
Code:
initial: Log likelihood = -7224.8875
Iteration 0: Log likelihood = -7224.8875
Iteration 1: Log likelihood = -6065.1666 (backed up)
Iteration 2: Log likelihood = -5868.4579 (backed up)
Iteration 3: Log likelihood = -5714.9868 (backed up)
Iteration 4: Log likelihood = -5693.4116 (backed up)
Iteration 5: Log likelihood = -5635.5574 (backed up)
Iteration 6: Log likelihood = -5627.7123 (backed up)
Iteration 7: Log likelihood = -5576.0618 (backed up)
Iteration 8: Log likelihood = -5492.4664 (backed up)
Iteration 9: Log likelihood = -5170.6388 (backed up)
Iteration 10: Log likelihood = -4820.927 (backed up)
Iteration 11: Log likelihood = -4654.692 (backed up)
Iteration 12: Log likelihood = -4582.0477
Iteration 13: Log likelihood = -3682.9697
Iteration 14: Log likelihood = -2918.4183
Iteration 15: Log likelihood = -1668.3032
Iteration 16: Log likelihood = -1573.0303
Iteration 17: Log likelihood = -1407.2167
Iteration 18: Log likelihood = -1199.2455
Iteration 19: Log likelihood = -1111.6501
Iteration 20: Log likelihood = -1036.1432
Iteration 21: Log likelihood = -994.09753
Iteration 22: Log likelihood = -961.96257
Iteration 23: Log likelihood = -914.4405
BFGS stepping has contracted, resetting BFGS Hessian
Iteration 24: Log likelihood = -890.15886
Iteration 25: Log likelihood = -890.15698 (backed up)
Iteration 26: Log likelihood = -887.35603 (backed up)
.................................................. ..................................

Iteration 98: Log likelihood = -845.8587
Iteration 99: Log likelihood = -841.51001
Iteration 100: Log likelihood = -841.36681

Inefficiency effects model (truncated-normal) Number of obs = 3370
Group variable: UIC Number of groups = 348
Time variable: Year Obs per group: min = 1
avg = 9.7
max = 10

Prob > chi2 = 0.0000
Log likelihood = -841.3668 Wald chi2(5) = 29977.96

---------------------------------------------------------------------------------------
lTC | Coef. Std. Err. z P>|z| [95% Conf. Interval]
----------------------+----------------------------------------------------------------
Frontier |
lSR | .8265737 .0056998 145.02 0.000 .8154022 .8377451
lpL | .3862649 .0144812 26.67 0.000 .3578823 .4146475
lpM | .3463463 .0080424 43.07 0.000 .3305836 .3621091
lpPhC | .0036081 .0061366 0.59 0.557 -.0084194 .0156357
Year | -.0242052 .0021223 -11.41 0.000 -.0283649 -.0200455
_cons | 49.74526 4.263296 11.67 0.000 41.38935 58.10117
----------------------+----------------------------------------------------------------
Mu |
category3 | -.0477896 .0180303 -2.65 0.008 -.0831284 -.0124509
category4 | -.0969461 .0202058 -4.80 0.000 -.1365486 -.0573435
category5 | -6.000944 .4847824 -12.38 0.000 -6.9511 -5.050788
Tourismspecialization | -.1345739 .2149034 -0.63 0.531 -.5557769 .2866291
_cons | .2507753 .0318595 7.87 0.000 .1883317 .3132188
----------------------+----------------------------------------------------------------
Usigma |
_cons | -5.155248 .2810498 -18.34 0.000 -5.706096 -4.604401
----------------------+----------------------------------------------------------------
Vsigma |
_cons | -2.400803 .0278476 -86.21 0.000 -2.455383 -2.346223
----------------------+----------------------------------------------------------------
sigma_u | .0759542 .0106735 7.12 0.000 .0576683 .1000385
sigma_v | .3010733 .0041921 71.82 0.000 .2929681 .3094028
lambda | .2522782 .0128424 19.64 0.000 .2271076 .2774489
------------------------------------------------------------------------------
Can you explain to me what this message 'BFGS stepping has contracted, resetting BFGS Hessian' means?
Should I do some extra actions with my data or I am using wrong syntax?

When I have trying to run the Profit Efficiency function I received this error message:

Code:
sfpanel EBIT lSR lpL lpM lpPhC Year, model(bc95) dist(tn) emean(category3 category4 category5 Tourismspecialization ) ort(o)
The results are:

Code:
initial: Log likelihood = -3.816e+09
Iteration 0: Log likelihood = -3.816e+09
could not calculate numerical derivatives -- flat or discontinuous region encountered
could not calculate numerical derivatives -- flat or discontinuous region encountered

Inefficiency effects model (truncated-normal) Number of obs = 3370
Group variable: UIC Number of groups = 348
Time variable: Year Obs per group: min = 1
avg = 9.7
max = 10

Prob > chi2 = .
Log likelihood = -7.346e+05 Wald chi2(0) = .

---------------------------------------------------------------------------------------
EBIT | Coef. Std. Err. z P>|z| [95% Conf. Interval]
----------------------+----------------------------------------------------------------
Frontier |
lSR | 1086.5 . . . . .
lpL | -840.1726 . . . . .
lpM | -991.0253 . . . . .
lpPhC | -122.3459 . . . . .
Year | 18.04479 . . . . .
_cons | -26225.4 . . . . .
----------------------+----------------------------------------------------------------
Mu |
category3 | 1.016451 . . . . .
category4 | 1.024072 . . . . .
category5 | 1.004471 . . . . .
Tourismspecialization | 1.001218 . . . . .
_cons | 1.047579 . . . . .
----------------------+----------------------------------------------------------------
Usigma |
_cons | 22.82486 . . . . .
----------------------+----------------------------------------------------------------
Vsigma |
_cons | 434.1319 . . . . .
----------------------+----------------------------------------------------------------
sigma_u | 90438.91 . . . . .
sigma_v | 1.86e+94 . . . . .
lambda | 4.85e-90 . . . . .
------------------------------------------------------------------------------
I can not understand what this message 'could not calculate numerical derivatives -- flat or discontinuous region encountered' means.
The dependent variables is EBIT and it can take negative value that is why I do not generate it into ln forms. Do you think that the problem is the negative values of some units or something else?

I will be so grateful if anyone can help me.
Thank you in advance.