National economic policies’ effects on growth were over-emphasized in the early literature on endogenous economic growth. Most of the early theoretical models of the new growth literature (and even their new neoclassical counterparts) predicted large policy effects, which was followed by empirical work showing large effects. A reappraisal finds that the alleged association between growth and policies does not explain many stylized facts of the postwar era, depends on the extreme policy observations, that the association is not robust to different estimation methods (pooled vs. fixed effects vs. cross-section), does not show up as expected in event studies of trade openings and inflation stabilizations, and is driven out by institutional variables in levels regressions.
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Paper provided by Center for Global Development in its series Working Papers with number
27.
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Rodrik, Dani, 2005.
"Growth Strategies,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 14, pages 967-1014
Elsevier.
[Downloadable!] (restricted)
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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