SUMMARY Holly, Pesaran, and Yamagata (Journal of Econometrics 2010; <b>158</b>: 160–173) use a panel of 49 states over the period 1975–2003 to show that state‐level real housing prices are driven by economic fundamentals, such as real per capita disposable income, as well as by common shocks, such as...

This paper replicates the Cornwell and Trumbull (1994) estimation of a crime model using panel data on 90 counties in North Carolina over the period 1981-1987. While the Between and Within estimates are replicated, the fixed effects 2SLS as well as the 2SLS estimates are not. In fact, the fixed...

The papers included in this special issue are primarily concerned with the problem of cross section dependence and heterogeneity in the analysis of panel data models and their relevance in applied econometric research. Cross section dependence can arise due to spatial or spill over effects, or...

This paper examines the permanence of excess capacity in the US airline industry. To avoid the problems with the standard engineering measure of capacity utilization, load factor, we define and measure capacity as an economic concept. Two measures of economic capacity utilization are then...

This paper studies the performance of panel unit root tests when spatial effects are present that account for cross-section correlation. Monte Carlo simulations show that there can be considerable size distortions in panel unit root tests when the true specification exhibits spatial error...