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Spatial autoregressive spillovers vs unobserved common factors models. A panel data analysis of international technology diffusion

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  • Cern Ertur
  • Antonio Musolesi

Abstract

This paper provides an econometric examination of geographic R&D spillovers among countries by focusing on the issue of cross-sectional dependence. By applying several unit root tests, we show that when the number of lags of the autoregressive component of augmented Dickey Fuller test-type speci…cations or the number of common factors is estimated in a model selection framework, the variables (total factor productivity and the R&D capital stocks) appear to be stationary. Then, we estimate the model using two complementary approaches, focusing on generalised spatial autoregression and unobserved common correlated factors. These approaches account for different types of cross-sectional dependence and are related to the notions of weak and strong cross-sectional dependence recently developed in the literature.

Suggested Citation

  • Cern Ertur & Antonio Musolesi, 2012. "Spatial autoregressive spillovers vs unobserved common factors models. A panel data analysis of international technology diffusion," INRA UMR CESAER Working Papers 2012/9, INRA UMR CESAER, Centre d'’Economie et Sociologie appliquées à l'’Agriculture et aux Espaces Ruraux.
    • Handle: RePEc:ceo:wpaper:41
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    2. Celbis M.G. & Crombrugghe D.P.I. de, 2014. "Can internet infrastructure help reduce regional disparities? : evidence from Turkey," MERIT Working Papers 2014-078, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    Panel data; Cross-section correlation; Spatial models; Factor models; Unit root;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • F0 - International Economics - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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