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Unit root and cointegration tests for cross-sectionally correlated panels. Estimating regional production functions

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Author Info
Roberto Basile, Mauro Costantini, Sergio Destefanis () (ISAE, Roma; Università di Macerata, ISAE, Roma, Università “La Sapienza” di Roma; CELPE and CSEF, Università di Salerno)

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Abstract

This paper employs recently developed non stationary panel methodologies that assume some cross-section dependence to estimate the production function for Italian regions in the industrial sector over the period 1970-1998. The analysis consists in three steps. First, unit root tests for cross-sectionally dependent panels are used. Second, the existence of a co-integrating relationship among value added, physical capital and human capital-augmented labor is investigated. The Dynamic OLS (DOLS) and Fully modified (FMOLS) estimators developed by Pedroni (1996, 2000, 2001) and the Panel Dynamic OLS (PDOLS) estimator proposed by Mark and Sul (2003) are then used to estimate the long run relationship between the variables considered.

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Publisher Info
Paper provided by CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy in its series CELPE Discussion Papers with number 94.

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Date of creation: May 2005
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Handle: RePEc:sal:celpdp:94

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Related research
Keywords: panel cointegration; cross-section dependence; production function;

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Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity

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References listed on IDEAS
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.:
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  29. McCoskey, Suzanne & Kao, Chihwa, 1999. " Testing the Stability of a Production Function with Urbanization as a Shift Factor," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 671-90, Special I. [Downloadable!] (restricted)
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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. Floro Ernesto Caroleo – Gianluigi Coppola, 2005. "The Impact of the Institutions on Regional Unemployment Disparities," CELPE Discussion Papers 98, CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy. [Downloadable!]
    Other versions:
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