LIMITATIONS OF THE PANEL REGRESSION MODEL APPLICATION: THE EXAMPLE OF THE WESTERN BALKAN COUNTRIES

Bojan Baškot; Stanko Stanić

doi:10.7251/ACE2032151B

Authors

Bojan Baškot Central Bank of Bosnia and Herzegovina, University of Banja Luka
Stanko Stanić University of Banja Luka, Faculty of Economics, Banja Luka

DOI:

https://doi.org/10.7251/ACE2032151B

Keywords:

panel regression model, heterogeneity, foreign direct investments, GDP growth

Abstract

Panel regression model may seem like an appealing solution in conditions of limited time series. This is often used as a shortcut to achieve deeper data set by setting several individual cases on the same time dimension, where cross units visually but not really multiply a time frame. Macroeconometrics of the Western Balkan region assumes short time series issue. Additionally, the structural brakes are numerous. Panel regression may seem like a solution, but there are some limitations that should be considered.

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