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How to measure the unobservable: a panel technique for the analysis of TFP convergence

Di Liberto, Adriana - Pigliaru, Francesco - Mura, Roberto (2004) How to measure the unobservable: a panel technique for the analysis of TFP convergence. Working Paper. CRENoS.


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This paper proposes a fixed-effect panel methodology that enables us to simultaneously take into account both TFP convergence and the traditional neoclassical-type of convergence. We analyse a sample of Italian regions between 1963 and 1993 and find strong evidence that both mechanisms were at work during the process of aggregate regional convergence observed in Italy up to the mid-seventies. Finally, we find that our TFP estimates are highly positively correlated with standard human capital measures, where the latter is not statistically significant in growth regressions. This evidence confirms one of the hypothesis of the Nelson and Phelps approach, namely that human capital is the main determinant of technological catch-up. Our results are robust to the use of different estimation procedures such as simple LSDV, Kiviet-corrected LSDV, and GMM à la Arellano and Bond.

Item Type:Technical Report / Working Paper / Project Report (Working Paper)
Date:February 2004
Institution:Universita' degli Studi di Cagliari
Divisions:Centri > CRENoS Centro Ricerche Economiche Nord Sud
Subjects:Area 13 - Scienze economiche e statistiche > SECS-P/06 Economia applicata
Uncontrolled Keywords:TFP, Panel data, regional convergence
ID Code:227
Deposited On:10 Nov 2008 09:00

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