Convergence in panel data: Evidence from the skipping estimation

Etsuro Shioji

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

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%.

Keywords: income convergence; panel data estimation; skipping estimation; measurement error biases; small sample biases (search for similar items in EconPapers)
JEL-codes: C23 O40 (search for similar items in EconPapers)
Date: 1997-08
New Economics Papers: this item is included in nep-dcm
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:235

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