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
| Identifer | oai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:6361 |
| Date | 17 May 2018 |
| Creators | Fischer, Manfred M., LeSage, James P. |
| Publisher | WU Vienna University of Economics and Business |
| Source Sets | Wirtschaftsuniversität Wien |
| Language | English |
| Detected Language | English |
| Type | Paper, NonPeerReviewed |
| Format | application/pdf |
| Relation | https://orcid.org/0000-0002-0033-2510, http://epub.wu.ac.at/6361/ |
Page generated in 0.0018 seconds