Joining Panel Data with Cross-Sections for Efficiency Gains: An Application to a Consumption Equation for Nicaragua
This paper explores how cross-sectional data can be exploited jointly with longitudinal data, in order to increase estimation efficiency while properly tackling the potential bias due to unobserved individual characteristics. We propose an innovative procedure and we show its implementation by analysing the determinants of consumption in Nicaragua, based on data from three Living Standard Measurement Study surveys from 1993, 1998 and 2001. The last two rounds constitute an unbalanced longitudinal data set, while the first is a cross-section of different households. Under the assumption that the relationship between observed and unobserved characteristics is homogeneous across time, information from longitudinal data is used to clean the bias in the unpaired sample. In a second step, corrected unpaired observations are used jointly with panel data. This reduces the standard errors of the estimation coefficients and might increase their significance as well, otherwise compromised by the limited variation provided by the short longitudinal data.
|Date of creation:||Dec 2007|
|Publication status:||published in: Giornale degli Economisti e Annali di Economia, 2009, 68 (2), 149-173|
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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.:
- Benjamin Davis & Marco Stampini, 2002. "Pathways Towards Prosperity in Rural Nicaragua: Why households drop in and out of poverty, and some policy suggestions on how to keep them out," Working Papers 02-12, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
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