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Convergence in panel data: Evidence from the skipping estimation
Shioji, Etsuro
Universitat Pompeu Fabra. Departament d'Economia i Empresa
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%.
2005-09-15
Macroeconomics and International Economics
income convergence
panel data estimation
skipping estimation
measurement error biases
small sample biases
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http://creativecommons.org/licenses/by-nc-nd/3.0/es/
Working Paper
         

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