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Basile, Roberto
Destefanis, Sergio
Costantini, Mauro
Year of Publication: 
Series/Report no.: 
45th Congress of the European Regional Science Association: "Land Use and Water Management in a Sustainable Network Society", 23-27 August 2005, Amsterdam, The Netherlands
There is a plethora of studies of regional production functions using stationary panel data. Only some recent works consider non-stationary panel data. All of them assume the hypothesis of cross-section independence. Here, we claim that the independence assumption is too strong when regional data are used. In this paper, the cross-section independence assumption is released and cross-sectional dependence is assumed. First, unit roots and cointegration properties of the panel dataset are properly investigated by using newly developed tests for cross-sectionally dependent panels. Second, dynamic OLS (DOLS) and recent regression models for cross-sectionally correlated panels are used to estimate the cointegrated relationship between value added, physical and human capital, for Italian regions over the period 1970-1998.
Document Type: 
Conference Paper

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