TY - UNPB
T1 - Cross-sectional dependence model specifications in a static trade panel data setting
AU - LeSage, James P.
AU - Fischer, Manfred M.
PY - 2017
Y1 - 2017
N2 - 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.
AB - 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.
U2 - 10.57938/ba2c8868-897c-4cbe-b4bf-41254c67e8c4
DO - 10.57938/ba2c8868-897c-4cbe-b4bf-41254c67e8c4
M3 - WU Working Paper
T3 - Working Papers in Regional Science
BT - Cross-sectional dependence model specifications in a static trade panel data setting
ER -