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John Gibson, Bonggeun Kim and Susan Olivia
''Cluster-Corrected Standard Errors with Exact Locations Known: An Example from Rural Indonesia''
( 2014, Vol. 34 No.3 )
Cluster-corrected standard errors are widely used but may sometimes be inappropriate since household surveys are increasingly geo-referenced. Compared with the appropriate spatial error models that use details on exact locations, cluster corrections impose untested restrictions on spatial correlations. Our example from rural Indonesia suggests cluster corrections are too conservative and may cause inference errors.
Keywords: Cluster-corrections, GPS, non-farm enterprises, spatial correlation
JEL: O1 - Economic Development: General
C8 - Data Collection and Data Estimation Methodology; Computer Programs: General
Manuscript Received : Jan 30 2014 Manuscript Accepted : Aug 20 2014

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