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National Policies and Economic Growth: A Reappraisal

In: Handbook of Economic Growth

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Easterly, William

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Abstract

The new growth literature, using both endogenous growth and neoclassical models, has generated strong claims for the effect of national policies on economic growth. Empirical work on policies and growth has tended to confirm these claims. This paper casts doubt on this claim for strong effects of national policies, pointing out that such effects are inconsistent with several stylized facts and seem to depend on extreme observations in growth regressions. More modest effects of policy are consistent with theoretical models that feature substitutability between the formal and informal sector, have a large share for the informal sector, or stress technological change rather than factor accumulation.

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This chapter was published in: Philippe Aghion & Steven Durlauf (ed.) Handbook of Economic Growth, , chapter 15, pages 1015-1059, 2005.

This item is provided by Elsevier in its series Handbook of Economic Growth with number 1-15.

Handle: RePEc:eee:grochp:1-15

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Related research
This chapter was published in the following book, which is listed on IDEAS:
Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1. [Downloadable!] (restricted)
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O0 - Economic Development, Technological Change, and Growth - - General

Cited by:
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  1. Dani Rodrick, 2003. "Growth Strategies," Economics working papers 2003-17, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
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  2. Ricardo Hausmann & Lant Pritchett & Dani Rodrik, 2004. "Growth Accelerations," NBER Working Papers 10566, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Michael Clemens & Charles Kenny & Todd Moss, 2004. "The Trouble with the MDGs: Confronting Expectations of Aid and Development Success," Development and Comp Systems 0405011, EconWPA. [Downloadable!]
    Other versions:
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