TY - UNPB
T1 - The role of socio-cultural factors in static trade panel models
AU - LeSage, James P.
AU - Fischer, Manfred M.
PY - 2018
Y1 - 2018
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 - 10.57938/4d863e1d-b0a2-48c5-92f3-9c53a487dc01
DO - 10.57938/4d863e1d-b0a2-48c5-92f3-9c53a487dc01
M3 - WU Working Paper
T3 - Working Papers in Regional Science
BT - The role of socio-cultural factors in static trade panel models
ER -