Unit root and cointegration tests for cross-sectionally correlated panels - Estimating regional production functions

Roberto Basile (), Sergio Destefanis and Mauro Costantini

ERSA conference papers from European Regional Science Association

Abstract: There is a plethora of studies of regional production functions using stationary panel data. Only some recent works consider non-stationary panel data. All of them assume the hypothesis of cross-section independence. Here, we claim that the independence assumption is too strong when regional data are used. In this paper, the cross-section independence assumption is released and cross-sectional dependence is assumed. First, unit roots and cointegration properties of the panel dataset are properly investigated by using newly developed tests for cross-sectionally dependent panels. Second, dynamic OLS (DOLS) and recent regression models for cross-sectionally correlated panels are used to estimate the cointegrated relationship between value added, physical and human capital, for Italian regions over the period 1970-1998.

Date: 2005-08
New Economics Papers: this item is included in nep-ecm, nep-ets and nep-geo
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Citations: View citations in EconPapers (4)

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https://www-sre.wu.ac.at/ersa/ersaconfs/ersa05/papers/171.pdf (application/pdf)

Related works:
Working Paper: Unit root and cointegration tests for cross-sectionally correlated panels. Estimating regional production functions (2005)
Working Paper: Unit root and cointegration tests for cross-sectionally correlated panels. Estimating regional production functions (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa05p171

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