EconPapers    
Economics at your fingertips  
 

A note on implementing gravity datasets with abundant zeros

Jordi Paniagua ()

Economics Bulletin, 2016, vol. 36, issue 1, 268-280

Abstract: This note presents a procedure to construct lighter FDI gravity datasets. The standard estimates using all potential dyads and many zeros are inefficient and present convergence issues. The standard balanced approach overlooks the fact that FDI is highly unbalanced and numerous country pairs rarely show investment activity. An empirical application reveals that our method improves the quality of statistical estimation. Standard datasets underestimate the effect of firm selection and heterogeneity and overestimate the negative effect of distance. Our method to construct gravity datasets reduces the number of zeros and yields unbiased estimates.

Keywords: foreign direct investment; FDI; gravity equation; zeros; dataset; PPML (search for similar items in EconPapers)
JEL-codes: F0 F2 (search for similar items in EconPapers)
Date: 2016-02-21
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I1-P27.pdf (application/pdf)

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:ebl:ecbull:eb-15-00116

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().

 
Page updated 2019-04-26
Handle: RePEc:ebl:ecbull:eb-15-00116