Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics
AbstractThis paper analyzes the link between long-run economic growth and policy that depends on important economic fundamentals. In simple growth regressions the measured policy effects would then generally be biased. Using a widely quoted theoretical model, the signs of the biases are derived. It is shown that the usually reported effects on growth of tax-rate variables related to GDP - the ratio of public to total investment and that of redistributive transfers to GDP - would generally be biased downwards. The signed biases provide a theory-based lens through which some empirical, yet theoretically puzzling, results can be viewed and subsequently discussed.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 166 (2010)
Issue (Month): 4 (December)
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Web page: http://www.mohr.de/jite
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Other versions of this item:
- Rehme, G¸nther, 2002. "Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics," Royal Economic Society Annual Conference 2002 157, Royal Economic Society.
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- D3 - Microeconomics - - Distribution
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
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- Rehme, Günther, 2007.
"Endogenous Policy and Cross-Country Growth Empirics,"
Darmstadt Discussion Papers in Economics
35720, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
- Günther Rehme, 2011. "Endogenous Policy And Cross‐Country Growth Empirics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(2), pages 262-296, 05.
- G? Rehme, 2004. "Endogenous Policy and Cross-Country Growth Empirics," Econometric Society 2004 North American Summer Meetings 262, Econometric Society.
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