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Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach

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  • Xavier Sala-I-Martin
  • Gernot Doppelhofer
  • Ronald I. Miller

Abstract

This paper examines the robustness of explanatory variables in cross-country economic growth regressions. It introduces and employs a novel approach, Bayesian Averaging of Classical Estimates (BACE), which constructs estimates by averaging OLS coefficients across models. The weights given to individual regressions have a Bayesian justification similar to the Schwarz model selection criterion. Of 67 explanatory variables we find 18 to be significantly and robustly partially correlated with long-term growth and another three variables to be marginally related. The strongest evidence is for the relative price of investment, primary school enrollment, and the initial level of real GDP per capita.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/0002828042002570
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File URL: http://www.aeaweb.org/aer/data/sept04_bace_data.zip
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 94 (2004)
Issue (Month): 4 (September)
Pages: 813-835

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Handle: RePEc:aea:aecrev:v:94:y:2004:i:4:p:813-835

Note: DOI: 10.1257/0002828042002570
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  1. Francesco Caselli & Gerardo Esquivel & Fernando Lefort, 1997. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Working Papers Central Bank of Chile 03, Central Bank of Chile.
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  8. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
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  14. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
  15. Xavier X. Sala-i-Martin, 1997. "I Just Ran Four Million Regressions," NBER Working Papers 6252, National Bureau of Economic Research, Inc.
  16. Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, vol. 16(2), pages 141-163, September.
  17. Leamer, Edward E, 1985. "Sensitivity Analyses Would Help," American Economic Review, American Economic Association, vol. 75(3), pages 308-13, June.
  18. J. Bradford De Long & Lawrence H. Summers, 1990. "Equipment Investment and Economic Growth," NBER Working Papers 3515, National Bureau of Economic Research, Inc.
  19. Carmen Fernandez & Eduardo Ley & Mark Steel, 1999. "Model uncertainty in cross-country growth regressions," Econometrics 9903003, EconWPA, revised 06 Oct 2001.
  20. Edward E. Leamer, 1982. "Let's Take the Con Out of Econometrics," UCLA Economics Working Papers 239, UCLA Department of Economics.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Democracia y crecimiento económico volátil (Por David Cuberes)
    by Jesús Fernández-Villaverde in Nada Es Gratis on 2011-02-09 07:00:07
  2. Why thereâ??s no â??GrowthGate:â? Frustration vs. Chicanery in Explaining Growth
    by William Easterly in Aid Watch on 2009-12-10 05:01:50
  3. Did Nations that Boosted Education Grow Faster? , by Garett Jones
    by ? in Econlog on 2012-10-29 09:36:20
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