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Estimating Distributed Lags in Short Panels with an Application to the Specification of Depreciation Patterns and Capital Stock Constructs

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Author Info
Ariel Pakes
Zvi Griliches

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Abstract

In this paper, we investigate the problem of estimating distributed lags in short panels. Estimates of the parameter of distributed lag relationships based on single time-series of observations have been usually rather imprecise. The promise of panel data is in the N repetitions of the time-series that it contains which should allow one to estimate the identified lag parameters with greater precision. On the other hand, panels tend to track their observations only over a relatively short time interval. Thus, some assumptions will have to be made on the contribution of the unobserved presample x's to the current values of y before any lag parameters can be identified from such data. In this paper we suggest two such assumptions; both of which are, at least in part, testable, and outline appropriate estimation techniques. The first places reasonable restrictions on the relationship between the presample and in sample x's while the second imposes conventional functional form constraints on the lag coefficients. The paper concludes with an example which investigates empirically how to construct a "capital stock" for profit or rate of return regressions.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0933.

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Date of creation: Oct 1984
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Handle: RePEc:nbr:nberwo:0933

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  1. White, Halbert, 1980. "Nonlinear Regression on Cross-Section Data," Econometrica, Econometric Society, vol. 48(3), pages 721-46, April. [Downloadable!] (restricted)
  2. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January. [Downloadable!] (restricted)
  3. MaCurdy, Thomas E., 1982. "The use of time series processes to model the error structure of earnings in a longitudinal data analysis," Journal of Econometrics, Elsevier, vol. 18(1), pages 83-114, January. [Downloadable!] (restricted)
  4. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January. [Downloadable!] (restricted)
  5. Maddala, G S & Rao, A S, 1971. "Maximum Likelihood Estimation of Solow's and Jorgenson's Distributed Lag Models," The Review of Economics and Statistics, MIT Press, vol. 53(1), pages 80-88, February. [Downloadable!] (restricted)
  6. Nerlove, Marc, 1972. "Lags in Economic Behavior," Econometrica, Econometric Society, vol. 40(2), pages 221-51, March. [Downloadable!] (restricted)
  7. Lawrence R. Klein, 1957. "The Estimation of Distributed Lags," Cowles Foundation Discussion Papers 34, Cowles Foundation, Yale University. [Downloadable!]
  8. White, Halbert, 1980. "Using Least Squares to Approximate Unknown Regression Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 149-70, February. [Downloadable!] (restricted)
  9. Geweke, John F & Meese, Richard, 1981. "Estimating Regression Models of Finite but Unknown Order," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(1), pages 55-70, February. [Downloadable!] (restricted)
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  10. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
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  1. Robert S. Chirinko, 1992. "Business Fixed Investment Spending: A Critical survey of Modeling Strategies, Empirical Results, and Policy Implications," Working Papers 9213, Harris School of Public Policy Studies, University of Chicago. [Downloadable!]
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  2. Cheng Hsiao, 2005. "Why Panel Data?," IEPR Working Papers 05.33, Institute of Economic Policy Research (IEPR). [Downloadable!]
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  3. Iain Cockburn & Murray Frank, 1992. "Market Conditions and Retirement of Physical Capital: Evidence fron Oil Tankers," NBER Working Papers 4194, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Lee Branstetter, 1996. "Are Knowledge Spillovers International or Intranational in Scope? Microeconometric Evidence from the Japan and the United States," NBER Working Papers 5800, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Loayza, Norman V. & Raddatz, Claudio, 2006. "The structural determinants of external vulnerability," Policy Research Working Paper Series 4089, The World Bank. [Downloadable!]
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  6. Vanhaverbeke, W.P.M. & Beerkens, B.E. & Duysters, G.M., 2003. "Explorative and exploitative learning strategies in technology-based alliance networks," ECIS Working Papers 03.22, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
  7. Jeremy J. Nalewaik, 2004. "Current Consumption and Future Income Growth: Synthetic Panel Evidence," BEA Working Papers 0015, Bureau of Economic Analysis. [Downloadable!]
  8. Raddatz, Claudio, 2005. "Are external shocks responsible for the instability of output in low income countries?," Policy Research Working Paper Series 3680, The World Bank. [Downloadable!]
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  9. Mark E Doms, 1992. "Estimating Capital Efficiency Schedules Within Production Functions," Working Papers 92-4, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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  10. Czarnitzki, Dirk & Hussinger, Katrin, 2004. "The Link Between R&D Subsidies, R&D Spending and Technological Performance," ZEW Discussion Papers 04-56, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  11. Nooteboom, Bart & Vanhaverbeke, Wim & Duysters, Geert & Gilsing, Victor & Oord, Ad van den, 2006. "Optimal cognitive distance and absorptive capacity," Discussion Paper 33, Tilburg University, Center for Economic Research. [Downloadable!]
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  12. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," NBER Working Papers 5067, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Mika Maliranta & Petri Rouvinen, 2003. "Productivity Effects of ICT in Finnish Business," Discussion Papers 852, The Research Institute of the Finnish Economy. [Downloadable!]
  15. Tybout, James R., 1991. "Researching the trade - productivity link : new directions," Policy Research Working Paper Series 638, The World Bank. [Downloadable!]
  16. Bronwyn Hall & Fumio Hayashi, 1989. "Research and Development As An Investment," NBER Working Papers 2973, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  17. John Bound & Michael Schoenbaum & Todd R. Stinebrickner & Timothy Waidmann, 1998. "The Dynamic Effects of Health on the Labor Force Transitions of Older Workers," NBER Working Papers 6777, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  18. Douglas Holtz-Eakin & Whitney Newey & Harvey Rosen, 1987. "Wages and Hours: Estimating Vector Autoregressions with Panel Data," Working Papers 602, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  19. Douglas Holtz-Eakin & Whitney K. Newey & Harvey S. Rosen, 1989. "Implementing Causality Tests with Panel Data, with an Example from LocalPublic Finance," NBER Technical Working Papers 0048, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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