Joining Panel Data with Cross-Sections forEfficiency Gains: An Application to aConsumption Equation for Nicaragua

This paper explores how cross-sectional data can be exploited jointly with longitudinal data,in order to increase estimation efficiency while properly tackling the potential bias due tounobserved individual characteristics. We propose an innovative procedure and we show itsimplementation by analysing the determinants of consumption in Nicaragua, based on datafrom three Living Standard Measurement Study surveys from 1993, 1998 and 2001. The lasttwo rounds constitute an unbalanced longitudinal data set, while the first is a cross-section ofdifferent households...