Premium
Firm‐Level Productivity Spillovers in China's Chemical Industry: A Spatial Hausman‐Taylor Approach
Author(s) -
Baltagi Badi H.,
Egger Peter H.,
Kesina Michaela
Publication year - 2015
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.2460
Subject(s) - total factor productivity , unobservable , economics , econometrics , heteroscedasticity , panel data , productivity , spatial econometrics , estimator , hausman test , spatial dependence , macroeconomics , statistics , fixed effects model , mathematics
Summary This paper assesses intra‐sectoral spillovers in total factor productivity (TFP) across Chinese producers in the chemical industry using panel data on 12,552 firms observed over 2004‐2006. We specify TFP as a composite of observable factors such as export market participation, foreign as well as public ownership, the extent of accumulated intangible assets, and unobservable components. We introduce spatial spillovers in TFP through contextual effects of observable variables as well as spatial dependence of the disturbances, extending the Hausman and Taylor (1981) estimator to account for spatial correlation in the error term which may be homoskedastic or heteroskedastic. Copyright © 2015 John Wiley & Sons, Ltd.