Regression modelEconometrics / time series

Dynamic Panel Data Model

The dynamic panel data model extends standard panel regression by including a lagged value of the outcome variable as a regressor, capturing persistence and adjustment dynamics. Because the lagged dependent variable is correlated with the unit-specific fixed effect, ordinary OLS or within estimators are biased; GMM-based methods using internal instruments are the standard remedy.

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Sources

  1. Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58(2), 277–297. DOI: 10.2307/2297968
  2. Hsiao, C. (2003). Analysis of Panel Data (2nd ed.). Cambridge University Press. ISBN: 978-0521522717

Related methods

Referenced by

ScholarGateDynamic Panel Data Model (Dynamic Panel Data Model). Retrieved 2026-06-04 from https://scholargate.app/tr/econometrics/dynamic-panel-data-model