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Convergence in panel data: Evidence from the skipping estimation

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  • Etsuro Shioji

Abstract

This paper demonstrates that, unlike what the conventional wisdom says, measurement error biases in panel data estimation of convergence using OLS with fixed effects are huge, not trivial. It does so by way of the "skipping estimation"': taking data from every m years of the sample (where m is an integer greater than or equal to 2), as opposed to every single year. It is shown that the estimated speed of convergence from the OLS with fixed effects is biased upwards by as much as 7 to 15%.

Suggested Citation

  • Etsuro Shioji, 1997. "Convergence in panel data: Evidence from the skipping estimation," Economics Working Papers 235, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:235
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    Cited by:

    1. Etsuro Shioji, 1997. "It's still 2%: evidence on convergence from 116 years of the US States panel data," Economics Working Papers 236, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Antonio Ciccone & Giovanni Peri & Douglas Almond, "undated". "Capital, Wages, and Growth: Theory and Evidence," Working Papers 152, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    3. Cuerva, Maria C., 2012. "Evolución de la productividad agraria en las regiones europeas: un análisis de convergencia con métodos de panel dinámicos," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 12(01), June.
    4. ?gel de la Fuente, "undated". "Convergence Across Countries And Regions: Theory And Empirics," UFAE and IAE Working Papers 447.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    5. Angel de la Fuente, "undated". "What kind of regional convergence?," Studies on the Spanish Economy 07, FEDEA.
    6. Dirk Frantzen, 2004. "Technological Diffusion and Productivity Convergence: A Study for Manufacturing in the OECD," Southern Economic Journal, John Wiley & Sons, vol. 71(2), pages 352-376, October.
    7. Miss Catriona Purfield, 2006. "Mind the Gap—Is Economic Growth in India Leaving Some States Behind?," IMF Working Papers 2006/103, International Monetary Fund.
    8. Diego Ismael León Nieto & Héctor Fabio Ríos Hernández, 2013. "Convergencia regional en el índice de desarrollo humano en Colombia," Revista Equidad y Desarrollo, Universidad de la Salle, October.

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    More about this item

    Keywords

    income convergence; panel data estimation; skipping estimation; measurement error biases; small sample biases;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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