@techreport{b253fd80f1e941ca8e5a4a0ad6811421,
title = "Cross-sectional dependence model specifications in a static trade panel data setting",
abstract = "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 and time-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.",
author = "James LeSage and Fischer, {Manfred M.}",
year = "2019",
month = mar,
day = "25",
doi = "10.57938/b253fd80-f1e9-41ca-8e5a-4a0ad6811421",
language = "English",
series = "Working Papers in Regional Science",
number = "2019/03",
publisher = "WU Vienna University of Economics and Business",
address = "Austria",
type = "WorkingPaper",
institution = "WU Vienna University of Economics and Business",
}