Confusion about cross sectional dependency

[Alberto Martinelli]

Hi, I have a lot of confusion about cross sectional dependency in panel data, particularly I don't understand what is done to account for this problem when we have N>T. In the case of heteroskedasticity and serial correlation what is usually done is to cluster standard errors, however, from what I have learned, this doesn't solve the issue of cross sectional dependency. I have heard that to account for this problem some people use Driscoll-Kraay standard errors with the command xtscc, but I have seen in other posts that this can be done only when the T dimension of the data is sufficiently large (I don't have clear what is 'sufficiently large either). Moreover, some people say that cross sectional dependency is a problem only in some specific cases and most of the times it is possible to ignore it, I am really confused... if someone could help me in this regard I would be so grateful.