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Estimating cross-industry cross-country models using benchmark industry characteristics

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Abstract

Empirical cross-industry cross-country models are applied widely in economics, for example to investigate the determinants of economic growth or international trade. Estimation generally relies on US proxies for unobservable technological industry characteristics, for example industries' dependence on external finance or relationship-specific inputs. We examine the properties of the estimator and find that estimates can be biased towards zero (attenuated) or away from zero (amplified), depending on how technological similarity with the US covaries with other country characteristics. We also develop an alternative estimator that yields a lower bound on the true effect in cross-industry cross-country models of comparative advantage.

Suggested Citation

  • Antonio Ciccone & Elias Papaioannou, 2010. "Estimating cross-industry cross-country models using benchmark industry characteristics," Economics Working Papers 1235, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2016.
  • Handle: RePEc:upf:upfgen:1235
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    Cited by:

    1. Bottasso, Anna & Conti, Maurizio & Sulis, Giovanni, 2017. "Firm dynamics and employment protection: Evidence from sectoral data," Labour Economics, Elsevier, vol. 48(C), pages 35-53.
    2. Beck, Thorsten & Demirgüç-Kunt, Asli & Singer, Dorothe, 2013. "Is Small Beautiful? Financial Structure, Size and Access to Finance," World Development, Elsevier, vol. 52(C), pages 19-33.
    3. Haltiwanger, John & Scarpetta, Stefano & Schweiger, Helena, 2014. "Cross country differences in job reallocation: The role of industry, firm size and regulations," Labour Economics, Elsevier, vol. 26(C), pages 11-25.
    4. Gamberoni, Elisa & Giordano, Claire & Lopez-Garcia, Paloma, 2016. "Capital and labour (mis)allocation in the euro area: some stylized facts and determinants," Working Paper Series 1981, European Central Bank.
    5. repec:bla:jageco:v:68:y:2017:i:1:p:280-300 is not listed on IDEAS
    6. Shen, Leilei, 2013. "Financial dependence and growth: Diminishing returns to improvement in financial development," Economics Letters, Elsevier, vol. 120(2), pages 215-219.
    7. Athanasouli, Daphne & Goujard, Antoine, 2015. "Corruption and management practices: Firm level evidence," Journal of Comparative Economics, Elsevier, pages 1014-1034.
    8. Bassanini, Andrea & Garnero, Andrea, 2013. "Dismissal protection and worker flows in OECD countries: Evidence from cross-country/cross-industry data," Labour Economics, Elsevier, pages 25-41.
    9. repec:oup:oxecpp:v:69:y:2017:i:4:p:897-917. is not listed on IDEAS
    10. Conti, Maurizio & Sulis, Giovanni, 2016. "Human capital, employment protection and growth in Europe," Journal of Comparative Economics, Elsevier, pages 213-230.
    11. Nunn, Nathan & Trefler, Daniel, 2014. "Domestic Institutions as a Source of Comparative Advantage," Handbook of International Economics, Elsevier.
    12. Seitz, Michael & Watzinger, Martin, 2017. "Contract enforcement and R&D investment," Research Policy, Elsevier, vol. 46(1), pages 182-195.
    13. Chen, Wen & Niebel, Thomas & Saam, Marianne, 2014. "Are intangibles more productive in ICT-intensive industries? Evidence from EU countries," ZEW Discussion Papers 14-070, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    14. Fafchamps, Marcel & Schündeln, Matthias, 2013. "Local financial development and firm performance: Evidence from Morocco," Journal of Development Economics, Elsevier, vol. 103(C), pages 15-28.

    More about this item

    Keywords

    International specialization and trade; industry growth; measurement error; financial development; institutions; regulation; factor endowments;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • F10 - International Economics - - Trade - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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