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Analysing Heterogeneity in Global Production Technology and TFP: The Case of Manufacturing

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Author Info
Eberhardt, Markus
Teal, Francis

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Abstract

In this paper we ask how technological differences in manufacturing production across countries can best be modeled when using a standard production function approach. We emphasise the importance of allowing for differences in the impact of observables and unobservables across countries, as well as of data time-series properties. Our novel twostage estimator, similar to the Pesaran (2006) Common Correlated Effects approach, can account for these matters. Empirical results and diagnostic testing provide strong support for technology heterogeneity. Results are supported when we adopt an econometric approach allowing for reverse causality. In the light of these findings the interpretation of regression intercepts as TFP levels collapses and we introduce an alternative measure.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10690.

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Date of creation: 19 Jun 2009
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Handle: RePEc:pra:mprapa:10690

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Related research
Keywords: Manufacturing Production; Parameter Heterogeneity; Nonstationary Panel Econometrics; Cross-section Dependence;

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Find related papers by JEL classification:
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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References listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eberhardt, Markus & Teal, Francis, 2009. "A Common Factor Approach to Spatial Heterogeneity in Agricultural Productivity Analysis," MPRA Paper 15810, University Library of Munich, Germany. [Downloadable!]
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