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A PANEL DATA APPROACH FOR PROGRAM EVALUATION: MEASURING THE BENEFITS OF POLITICAL AND ECONOMIC INTEGRATION OF HONG KONG WITH MAINLAND CHINA
Author(s) -
Hsiao Cheng,
Steve Ching H.,
Ki Wan Shui
Publication year - 2012
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.1230
Subject(s) - mainland china , panel data , exploit , china , construct (python library) , politics , counterfactual conditional , mainland , estimation , china mainland , economics , cross sectional data , economic integration , econometrics , political science , international trade , geography , computer science , counterfactual thinking , computer security , management , archaeology , law , programming language , philosophy , epistemology
SUMMARY We propose a simple‐to‐implement panel data method to evaluate the impacts of social policy. The basic idea is to exploit the dependence among cross‐sectional units to construct the counterfactuals. The cross‐sectional correlations are attributed to the presence of some (unobserved) common factors. However, instead of trying to estimate the unobserved factors, we propose to use observed data. We use a panel of 24 countries to evaluate the impact of political and economic integration of Hong Kong with mainland China. We find that the political integration hardly had any impact on the growth of the Hong Kong economy. However, the economic integration has raised Hong Kong's annual real GDP by about 4%. Copyright © 2011 John Wiley & Sons, Ltd.