Estimation of Industry-level Productivity with Cross-sectional Dependence by Using Spatial Analysis

Jaepil Han and Robin Sickles

Working Papers from Rice University, Department of Economics

Abstract: We examine aggregate productivity in the presence of inter-sectoral linkages. Cross-sectional dependence is inevitable among industries, in which each sector serves as a supplier to the other sectors. However, the chains of such interconnections cause indirect relationship among industries. Spatial analysis is one of the approaches to address cross-sectional dependence by using a priori a specified spatial weights matrix. We exploit the linkage patterns from the input-output tables and use them to assign spatial weights to describe the economic interdependencies. By using the spatial weights matrix, we can estimate the industry-level production functions and productivity of the U.S. from 1947 to 2010. Cross-sectional dependencies are the consequences of indirect effects, and they reflect the interactions among industries linked via their supply chain networks result in larger output elasticities as well as scale effects for the networked production processes. However, productivity growth estimates are reportedly comparable across various spatial and non-spatial model specications.

JEL-codes: C21 C23 C51 O47 R15 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-eff, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://economics.rice.edu/file/3916/download?token=_7l9zJvG
Our link check indicates that this URL is bad, the error code is: 406 Not Acceptable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:riceco:19-002

Access Statistics for this paper

More papers in Working Papers from Rice University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().