A fast, easy, and efficient estimator for the trade flux between heterogeneous economies

Sova, Robert and Sova, Anamaria (2007): A fast, easy, and efficient estimator for the trade flux between heterogeneous economies.

Abstract

Compared to time-series or cross-section analyses, panel data allow us to control for individual specific characteristics - possibly unobservable - which may be correlated with certain explanatory variables in the specification of an economic relationship. Not controlling for unobservables leads to obtaining biased results. After controlling for such unobservable characteristics, we calculate efficient estimates of a trade flux equation between heterogeneous economies.

• Item Type: MPRA Paper
• Institution: Academia de Studii Economice (Academy of Economic Studies)
• Language: English
• Keywords: international trade; POLS estimators; individual heterogeneity; fixed effects; random effects
• Subjects: F - International Economics > F1 - Trade > F15 - Economic Integration; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation

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