A time varying coefficient model for panel data: Foreign Direct Investment in European OECD countries

Petr Mariel, Susan Orbe and Carlos Rodríguez González

No 1134-8984, BILTOKI from Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística)

Abstract: The present article reexamines some of the issues regarding the Knowledge-Capital Model that encompasses both horizontal and vertical Foreign Direct Investment described in detail in the literature. The empirical support for this model is however a mixture. This article proposes a new way of estimating coefficients by allowing them to vary over time. The estimation results obtained using data from fourteen European countries for the period from 1982 to 2004 confirm that these coefficients cannot be considered constant over time and that the vertical component of the Knowledge-Capital Model is relevant even in the context of European countries with relatively similar endowments.

Keywords: foreign direct investment; time-varying coefficients (search for similar items in EconPapers)
Date: 2007-04
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Dpto. de Econometría y Estadística, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain

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