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dcce (version 0.4.2)

amg_estimator: Augmented Mean Group (AMG) Estimator Internals

Description

Internal helpers for the Augmented Mean Group (AMG) estimator of Eberhardt & Teal (2010) and Bond & Eberhardt (2013). AMG accounts for cross-sectional dependence via a two-step procedure:

Arguments

Details

  1. Fit a pooled first-difference regression of \(\Delta y_{it}\) on \(\Delta x_{it}\) augmented with \(T-1\) time dummies.

  2. Extract the time-dummy coefficients as the Common Dynamic Process (CDP), a non-parametric proxy for unobserved common factors.

  3. Cumulate the CDP within each unit (back to the level) and add it as an extra regressor in a unit-level OLS on levels.

  4. Average the unit-level slopes (excluding the CDP) to obtain the AMG Mean Group estimate.

This implementation uses base R throughout and does not add any new package dependencies.