A reasonably simple and consistent bias adjusted LSDV estimator, for which we find an analytical and a bootstrap consistent estimator of its variance, performs relatively well. Further higher-order refinements of the bias correction do not improve the accuracy considerably.
Most techniques show substantial size distortions for asymptotic t tests.
Finally, it is illustrated how these findings help to interpret empirical results on the relationship between so-called dynamic externalities and local economic activity in Moroccan urban areas. Please take the time and register at our new service.