Seminario titulado: "Estimating Regional Production Functions: The EU NUTS2 Case". El seminario será el miercóles 21 de febrero a las 12:30hs, en la sala Dr. Ernest LLuch (Dpto de Economía)
Abstract: Total Factor Productivity estimates, obtained via a number of alternative approaches, have been extensively used in the regional economics literature. A common denominator of the panel-based estimation approaches is the imposition of rather strong homogeneity assumptions. For example, the technology parameters of the production function are assumed to be equal across all regions, that is, common slopes for the labour and capital coefficients are imposed. This paper employs recently developed panel time series econometrics techniques which allow for heterogeneous technology parameters. Moreover, this approach accounts for dependencies across regions arising from both global shocks with unit-specific impacts and from shocks local in nature, in the spirit of spillovers and a type of endogeneity bias that has been largely neglected in the relevant literature. Using a panel covering the EU NUTS2 regions over the last 25 years, this paper documents the importance of accounting for both heterogeneous technology as well as for the time series properties of the variables when estimating TFP levels and growth rates. Moreover, it demonstrates how the choice of the appropriate estimation approach affects the magnitudes of TFP levels and growth rates.
