Testing for nonlinear panel unit roots under cross-sectional dependency — With an application to the PPP hypothesis

Economic panel data often exhibit cross-sectional dependence, even after conditioning on appropriate explanatory variables. Two approaches to modeling cross-sectional dependence in economic panel data are often used: the spatial dependence approach, which explains cross-sectional dependence in terms of distance among units, and the residual multifactor approach, which explains cross-sectional dependence by common factors that affect individuals to a different extent. This article reviews the theory on estimation and statistical inference for stationary and nonstationary panel data with cross-sectional dependence, particularly for models with a multifactor error structure. Tests and diagnostics for testing for unit roots, slope homogeneity, cointegration, and the number of factors are provided. We discuss issues such as estimating common factors, dealing with parameter plethora in practice, testing for structural stability and nonlinearity, and dealing with model and parameter uncertainty. Finally, we address issues related to the use of these economic panel models.

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Bilateral Trade Elasticities Sweden Versus Her Major Trading Partners

American Review of Political Economy ◽

10.38024/arpe.88 ◽

2005 ◽

Vol 3 (2) ◽

Cited By ~ 1

Author(s):

Abdulnasser Hatemi-J ◽

Keyword(s):

Trade Balance ◽

Bilateral Trade ◽

Unit Roots ◽

Policy Implications ◽

Cross Sectional ◽

Exchange Rate Fluctuations ◽

Trade Elasticities ◽

Long Run ◽

Highly Sensitive ◽

Trading Partners

This study explores the long-run bilateral trade elasticities between Sweden and its six major trading partners for the period 1960-1999. Tests for unit roots and cointegration in a panel perspective are conducted. The estimated cross sectional trade elasticities show that trade is highly sensitive to changes in income but less sensitive to real exchange rate fluctuations. The bilateral trade elasticities disclose that the MarshallLerner condition is not satisfied (except for Germany) and real depreciation of the Swedish currency has less favorable impact on the trade balance. The policy implications of our findings are also discussed.

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Trade and Convergence: Empirical Evidence from BRICS Countries

Global Business Review ◽

10.1177/0972150921993057 ◽

2021 ◽

pp. 097215092199305

Author(s):

Kuldeep Kumar Lohani

Keyword(s):

Trade Liberalization ◽

Convergence Rates ◽

Unit Roots ◽

Income Convergence ◽

Conditional Convergence ◽

Panel Unit Roots ◽

Brics Countries ◽

Trading Partners ◽

Single Difference ◽

Economic Bloc

The present article attempts to analyse trade and per capita income convergence for the BRICS countries. The effects of economic bloc formation on their trade and income distribution or convergence (divergence) among the countries have been analysed. To observe the effect of trade on convergence rates, intra-trade group, single difference approach and panel unit roots tests have been used. The convergence measure is estimated between BRICS countries and their major trading partners from post-trade liberalization period. The study revealed that BRICS countries converged over the study period. However, the evidence on post-BRICS economic bloc formation shows an insignificant relationship. The results of the analysis of post-trade liberalization of BRICS countries vary among the BRICS countries. Further, panel unit roots test results confirm that conditional convergence is taking place within BRICS bloc and all export-based groups except for Indian economy and import-based groups. Besides, absolute convergence has been confirmed for all the groups. Thus, the study suggests the need of BRICS countries to actively engage in trade and investment activities.

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