June 12, 2011

Estimating Ricardian Models With Panel Data - NBER WP

The paper "Estimating Ricardian Models with Panel Data", joint with R. Mendelsohn, was published as NBER working paper last week.


Many nonmarket valuation models, such as the Ricardian model, have been estimated using cross sectional methods with a single year of data. Although multiple years of data should increase the robustness of such methods, repeated cross sections suggest the results are not stable. We argue that repeated cross sections do not properly specify the model. Panel methods that correctly specify the Ricardian model are stable over time. The results suggest that many cross sectional methods including hedonic studies and travel cost studies could be enhanced using panel data.

Massetti, E. and R. Mendelsohn (2011). “Estimating Ricardian Functions with Panel Data.” NBER Working Paper No. 17101, June 2011.