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The role of socio-cultural factors in static trade panel models

The focus is on cross-sectional dependence in panel trade
flow models. We propose alternative
specifications for modeling time invariant factors such as socio-cultural indicator variables, e.g.,
common language and currency. These are typically treated as a source of heterogeneity eliminated using fixed effects transformations, but we find evidence of cross-sectional dependence after eliminating country-specific effects. These findings suggest use of alternative simultaneous dependence model specifications that accommodate cross-sectional dependence, which we set forth along with Bayesian estimation methods. Ignoring cross-sectional dependence implies biased estimates from panel trade flow models that rely on fixed effects. / Series: Working Papers in Regional Science

Identiferoai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:6361
Date17 May 2018
CreatorsFischer, Manfred M., LeSage, James P.
PublisherWU Vienna University of Economics and Business
Source SetsWirtschaftsuniversität Wien
LanguageEnglish
Detected LanguageEnglish
TypePaper, NonPeerReviewed
Formatapplication/pdf
Relationhttps://orcid.org/0000-0002-0033-2510, http://epub.wu.ac.at/6361/

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