Open AccessOld Wine in a New Bottle: Are Financial Variables Omitted Variables in the Production Function?
Author(s) -
Nicholas Apergis
Publication year - 2010
Publication title -
research in world economy
Language(s) - English
Resource type - Journals
eISSN - 1923-399X
pISSN - 1923-3981
DOI - 10.5430/rwe.v1n1p2
Subject(s) - panel data , production (economics) , econometrics , estimator , function (biology) , variables , production function , economics , exploit , set (abstract data type) , variable (mathematics) , data set , statistics , mathematics , computer science , microeconomics , mathematical analysis , computer security , evolutionary biology , programming language , biology
This paper examines the role of financial variables in the production function by making use of nonlinear regressions along with panel data techniques and a G7 data panel set. It offers a non-linear GMM estimator that makes use of instruments that exploit information from the levels of the variables in the production function, while it uses both one-level and two-level bootstraps to check whether the estimates are supported by the data. The results suggest that both money and credit aggregates enter significantly the aggregate production function as an input, indicating that both variables seem to facilitate the process of production.