Please use this identifier to cite or link to this item:
Full metadata record
DC FieldValueLanguage
dc.contributor.authorEberhardt, Markusen_US
dc.contributor.authorTeal, Francisen_US
dc.description.abstractThe cross-country growth literature commonly uses aggregate economy datasets such as the Penn World Table (PWT) to estimate homogeneous production function or convergence regression models. Against the background of a dual economy framework this paper investigates the potential bias arising when aggregate economy data instead of sectoral data is adopted in macro production function regressions. Using a unique World Bank dataset we estimate production functions in agriculture and manufacturing for a panel of 41 developing and developed countries (1963-1992). We employ novel empirical methods which can accommodate technology heterogeneity, variable nonstationarity and the breakdown of the standard crosssection independence assumption. We focus on technology heterogeneity across sectors and countries and the potential for biased estimates due to aggregation and empirical misspecification, relying on both theory and empirical evidence. Using data for a stylised aggregate economy made up of agricultural and manufacturing sectors we confirm substantial bias in the technology coefficients and thus any total factor productivity measures computed. Our empirical findings imply that sectoral structure is of crucial importance in the analysis of growth and development, thus strengthening the recent revival of research on structural change in development economics.en_US
dc.publisher|aCentre for Research in Economic Development and International Trade, Univ. of Nottingham |cNottinghamen_US
dc.relation.ispartofseries|aCREDIT Research Paper |x11/08en_US
dc.subject.keyworddual economy modelen_US
dc.subject.keywordcross-country production functionen_US
dc.subject.keywordaggregation biasen_US
dc.subject.keywordtechnology heterogeneityen_US
dc.subject.keywordcommon factor modelen_US
dc.subject.keywordpanel time series econometricsen_US
dc.titleAggregation versus heterogeneity in cross-country growth empiricsen_US
dc.typeWorking Paperen_US

Files in This Item:
503.81 kB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.