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The paper explores the effect of measurement errors on the estimation of a linear panel data model. The conventional fixed effects estimator, which ignores measurement errors, is biased. By correcting for the bias one can construct consistent and asymptotically normal estimators. In addition, we find estimates for the asymptotic variances of these estimators. The paper focuses on multiplicative errors, which are often deliberately added to the data in order to minimize their disclosure risk. They can be analyzed in a similar way as additive errors, but with some important and consequential differences.

IFPRI3; ISI; 3 Building Inclusive and Efficient Markets, Trade Systems, and Food Industry; 4 Transforming Agricultural and Rural Economies; ; EPTD ; PR

This paper analyzes the effect of world governance indicators on inward foreign direct investment. The sample covers 38 developed and 82 developing countries between 2002 and 2018. The results of the system GMM regressions suggest that governance indicators are important determinants of inward FDI for developed countries. Moreover, it is shown that it is important to control for dynamic effects. In comparison, for developing countries, other country characteristics – the mean tariff rate – are more important than the institutional setting.

This study examines the various bank specific and macroeconomic variables that affect the banking system stability in Ethiopia during the study period ranging from 2000 to 2013. Arellano-Bond estimation technique had been employed to estimate the various determinants. From the Empirical result of this paper it was concluded that previous year banking system stability, economic growth and lending growth to the private sector were amongst determinants that affect the banking system stability positively; whereas total bank's asset, inflation and real interest rate were found to negatively affect the banking system stability; whilst government budget deficit, exchange rate volatility and treasury bills were found not having any impact on the banking system stability in Ethiopia. The policy implications of these results is so vital to the banking industry in Ethiopia, incase that most of the variables can be maintained and controlled by the National Bank of Ethiopia. The researcher thus finally puts the policy implications based on these results. To maintain the banking system stability in Ethiopia the researcher recommends to uphold: the economic growth of the country, previous year's banking system stability, bank lending growth and increasing the management's aptitude especially to lessen the diseconomies of scale in the banking industry; on the contrary the researcher recommends to dwindle the inflation rate and interest rate.