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On the Estimation of Simultaneous-Equations Error-Components Models with an Application to a Model of Developing Country Foreign Trade

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  • Kinal, T
  • Lahiri, K

Abstract

An empirical balance of payments model involving the demand and supply of imports and exports for 31 developing countries is estimated utilizing panel data over 1964-87. In order to compute error-components 3SLS estimates of this model, which requires different instruments for different equations, we propose a generalization of the Fuller-Battese transformation to obtain GMM estimates. Our empirical results suggest that very little of the short-run adjustment in external imbalances is likely to be achieved by exchange rate policies, and most of the burden must fall on aggregate demand management. Copyright 1993 by John Wiley & Sons, Ltd.

Suggested Citation

  • Kinal, T & Lahiri, K, 1993. "On the Estimation of Simultaneous-Equations Error-Components Models with an Application to a Model of Developing Country Foreign Trade," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(1), pages 81-92, Jan.-Marc.
    • Handle: RePEc:jae:japmet:v:8:y:1993:i:1:p:81-92
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    Citations

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    Cited by:

    1. Antonis Adam & Margarita Katsimi & Thomas Moutos, 2012. "Inequality and the import demand function," Oxford Economic Papers, Oxford University Press, vol. 64(4), pages 675-701, October.
    2. Davies, Stephen P. & Erickson, Kenneth W. & Vickner, Steven S. & Hoag, Dana L. & Nehring, Richard F., 2005. "An Error-Components Three-Stage Least-Squares Model of Investment Allocation by Farm Households," 2005 Annual meeting, July 24-27, Providence, RI 19249, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Robert Anderton & Badi H. Baltagi & Frauke Skudelny & Nuno Sousa, 2007. "Intra- and Extra-Euro Area Import Demand for Manufactures," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 53(3), pages 221-241.
    4. Fabio Pammolli & Nicola Carmine Salerno, 2008. "Occupazione, produttività e demografia: le sfide per la crescita del Mezzogiorno - Riforme strutturali per dare basi al federalismo," Working Papers CERM 02-2008, Competitività, Regole, Mercati (CERM).
    5. Mário Jorge Mendonça & Paulo R. A. Loureiro & Antônio Nascimento & Roberto Ellery, 2021. "Assessment of the effect of broadband expansion on the economy reviewed," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 2414-2432, November.
    6. Gopinath Munisamy & Pick Daniel & Li Yonghai, 2003. "Concentration and Innovation in the U.S. Food Industries," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-23, August.
    7. Laura Magazzini & Fabio Pammolli & Nicola Carmine Salerno, 2006. "La spesa farmaceutica pubblica - Analisi degli ultimi anni e indicazioni per una nuova politica economica," Working Papers CERM 03-2006, Competitività, Regole, Mercati (CERM).
    8. Pinka Chatterji & Dohyung Kim & Kajal Lahiri, 2014. "Birth Weight And Academic Achievement In Childhood," Health Economics, John Wiley & Sons, Ltd., vol. 23(9), pages 1013-1035, September.
    9. Laszlo, Sonia, 2008. "Education, Labor Supply, and Market Development in Rural Peru," World Development, Elsevier, vol. 36(11), pages 2421-2439, November.
    10. Kajal Lahiri & Jianting Hu, 2021. "Productive efficiency in processing social security disability claims: a look back at the 1989–95 surge," Empirical Economics, Springer, vol. 60(1), pages 419-457, January.
    11. Sugata Ghosh & Iannis A. Mourmouras & Sarmistha Pal & Ivan Paya, 2003. "On Public Investment, the Real Exchange Rate and Growth: Some Empirical Evidence from the UK and the USA," Manchester School, University of Manchester, vol. 71(3), pages 242-264, June.
    12. Ghassan, Hassan B., 2001. "Estimation Robuste des Equations d’Importation à Contamination Ponctuelle [Robust estimation of the Equations of Punctual contaminated Imports]," MPRA Paper 56429, University Library of Munich, Germany, revised 28 Sep 2001.
    13. Vickner, Steven S. & Davies, Stephen P., 1999. "Estimating Market Power And Pricing Conduct In A Product-Differentiated Oligopoly: The Case Of The Domestic Spaghetti Sauce Industry," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(1), pages 1-13, April.
    14. Nadezhda Ivanova, 2007. "Estimation of the Equilibrium Real Exchange Rate in Russia: Trade-Balance Approach," Working Papers w0102, New Economic School (NES).
    15. Sara Barcenilla-Visús & Carmen López-Pueyo, 2000. "Macroeconomic competitiveness in the Europe of the Twelve: An application to 1969–93," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 6(4), pages 597-618, November.
    16. Gopinath, Munisamy & Pick, Daniel H. & Li, Yonghai, 2002. "Does Industrial Concentration Raise Productivity In Food Industries?," 2002 Annual Meeting, July 28-31, 2002, Long Beach, California 36634, Western Agricultural Economics Association.
    17. Nadezhda Ivanova, 2007. "Estimation of the Equilibrium Real Exchange Rate in Russia: Trade-Balance Approach," Working Papers w0102, Center for Economic and Financial Research (CEFIR).

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