Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics
AbstractThis paper analyses the link between growth and public policy when the latter depends on economically important fundamentals. When policy is endogenous the measured effects of policy on growth will 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 investment to total investment and the ratio of redistributive transfers to GDP are generally biased downwards. Based on these signed biases the paper discusses some empirical results that seem puzzling from a theoretical viewpoint.
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Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 157.
Date of creation: 29 Aug 2002
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Other versions of this item:
- Günther Rehme, 2010. "Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(4), pages 735-759, December.
- 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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- G? Rehme, 2004.
"Endogenous Policy and Cross-Country Growth Empirics,"
Econometric Society 2004 North American Summer Meetings
262, Econometric Society.
- 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.
- 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).
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