Incorporating temporal and country heterogeneity in growth accounting—an application to EU-KLEMS
Abstract The paper derives measures of sectoral productivity from a model specification that allows for cross-sectional specific trends and time varying slopes in panel models with fixed N. The specification nests a number of commonly used panel data models introduced in the literature which deal with group specific trends. The econometric model is represented in state-space form. We provide a production frontier interpretation of this group specific temporal variation and derive a post-estimation growth accounting to provide a quantitative assessment of the main factors behind sectoral labour productivity growth. We make use of the EU-KLEMS dataset, covering the period 1977–2007 for 13 countries and 20 sectors of each economy.
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Volume (Year): 47 (2017)
Issue (Month): 2 (April)
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