Pooled Mean Group Estimation of the Bilateral Inpayments and Outpayments for Bangladesh vis-à-vis Major Trading Partners
Abstract: In addressing the issue of short-run heterogeneity as well as long-run homogeneity of the estimated coefficients in a panel framework, the Pooled Mean Group (PMG) estimator (Pesaran et al., 1999) has gained popularity in applied research in economics and business recently. This estimation method has been used successfully in the context of bilateral trade balance estimation for the US with its major trading partners (Goswami and Junayed, 2006), and in another context the bilateral exports and imports model has been extended by modeling bilateral inpayments and outpayments separately for Japan and its major trading partners (Bahmani-Oskooee and Goswami, 2004) by using Autoregressive Distributed Lag (ARDL) approach to cointegration on a partner-by-partner basis. The major limitations of these kind of bilateral models is low power and resulting wrong sign and insignificance of the estimated coefficients due to functional misspecification, multicollinearity as well as omitted variable bias which call for a panel setup in the light of bilateral framework. The present paper fills this gap in the existing literature by estimating both the equations of bilateral inpayments and outpayments for Bangladesh vis-à-vis its 15 major trading partners for the period 1973Q3-2004Q2 using the PMG estimation. The paper reveals that the speed of adjustment measured by the short-run error correction coefficients is lower in PMG estimation compared to ARDL estimation. This might raise another important research question that panel framework may provide better estimates for major parameters of the model in the long run at the cost of allowing lower speed of adjustments in the short run.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by IUP Publications in its journal The IUP Journal of Applied Economics.
Volume (Year): IX (2010)
Issue (Month): 1 (January)
Contact details of provider:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (G R K Murthy).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.