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

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Author Info
Petr Mariel () (UPV/EHU, Facultad de Ciencias Económicas y Empresariales)
Susan Orbe () (UPV/EHU, Facultad de Ciencias Económicas y Empresariales)
Carlos Rodríguez () (UPV/EHU, Facultad de Ciencias Económicas y Empresariales)
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.

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Paper provided by Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística) in its series BILTOKI with number 200703.

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Date of creation: 23 Apr 2007
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Handle: RePEc:ehu:biltok:200703

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Postal: 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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Related research
Keywords: Foreign Direct Investment Time-varying coefficients

Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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References listed on IDEAS
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    Other versions:
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  4. Bruce A. Blonigen & Ronald B. Davies & Keith Head, 2002. "Estimating The Knowledge-Capital Model of the Multinational Enterprise: Comment," University of Oregon Economics Department Working Papers 2002-13, University of Oregon Economics Department, revised 01 Mar 2002. [Downloadable!]
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  6. Petr Mariel, 2005. "Nonparametric Estimation of the Effects of Advertising: The Case of Lydia Pinkham," Journal of Business, University of Chicago Press, vol. 78(2), pages 649-674, March. [Downloadable!]
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  17. David L. Carr & James R. Markusen & Keith E. Maskus, 2001. "Estimating the Knowledge-Capital Model of the Multinational Enterprise," American Economic Review, American Economic Association, vol. 91(3), pages 693-708, June. [Downloadable!] (restricted)
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  18. David L. Carr & James R. Markusen & Keith E. Maskus, 2003. "Estimating the Knowledge-Capital Model of the Multinational Enterprise: Reply," American Economic Review, American Economic Association, vol. 93(3), pages 995-1001, June. [Downloadable!] (restricted)
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