The Formulation and Estimation of Random Effects Panel Data Models of Trade
The paper introduces for the most frequently used three- dimensional panel data sets several random effects model specifications. It derives appropriate estimation methods for the balanced and unbalanced cases and deals with some extensions as well. An application is also presented where the bilateral trade of 20 EU countries is analysed for the period 2001-2006. The differences between the fixed and random effects specifications are highlighted through this empirical exercise.
|Date of creation:||05 May 2012|
|Date of revision:||25 Mar 2013|
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- Peter Egger & Michael Pfaffermayr, 2003. "The proper panel econometric specification of the gravity equation: A three-way model with bilateral interaction effects," Empirical Economics, Springer, vol. 28(3), pages 571-580, July.
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- Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2003. "A generalized design for bilateral trade flow models," Economics Letters, Elsevier, vol. 80(3), pages 391-397, September.
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5850, C.E.P.R. Discussion Papers.
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- Davis, Peter, 2002. "Estimating multi-way error components models with unbalanced data structures," Journal of Econometrics, Elsevier, vol. 106(1), pages 67-95, January.
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