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Does Culture Cause Economic Development? A Reassessment of the Evidence from European Regions

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  • Jeremy Edwards

Abstract

This paper shows that Tabellini’s recent claim to have provided evidence that culture has a causal effect on economic development is unjustified. Tabellini’s claim is based on an instrumental variables analysis in which two instruments are used to identify the supposed causal effect. One of these – past literacy – is an invalid instrument. The other – past political institutions – is a weak instrument. The estimates obtained using this second instrument are so imprecise that they cannot be used to support any conclusions about the effect of culture on economic development.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-11/cesifo1_wp4015.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4015.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_4015

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Keywords: culture; economic development; instrumental variables; weak instruments;

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  1. Guido Tabellini, 2006. "Culture and institutions: economic development in the regions of Europe," Levine's Working Paper Archive 321307000000000241, David K. Levine.
  2. Jean-Marie Dufour, 2003. "Identification, Weak Instruments and Statistical Inference in Econometrics," CIRANO Working Papers, CIRANO 2003s-49, CIRANO.
  3. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," Boston College Working Papers in Economics, Boston College Department of Economics 545, Boston College Department of Economics, revised 14 Feb 2003.
  4. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  5. Jinyong Hahn & Jerry Hausman, 2003. "Weak Instruments: Diagnosis and Cures in Empirical Econometrics," American Economic Review, American Economic Association, American Economic Association, vol. 93(2), pages 118-125, May.
  6. DUFOUR, Jean-Marie, 2003. "Identification, Weak Instruments and Statistical Inference in Econometrics," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 10-2003, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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