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Growth, Convergence And Public Investment. A Bayesian Model Averaging Approach

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  • Roberto León-González

    (Centre for Health Economics. University of York (United Kingdom))

  • Daniel Montolio

    () Departament d’Hisenda Pública. Universitat de Barcelona. Department of Economics. University of York (United Kingdom). Institut d’Economia de Barcelona (IEB))

Abstract

The aim of this paper is twofold. Firstly, we study the determinants of growth among a wide set of potential variables for the Spanish provinces (NUTS3). We include several types of private, public and human capital in the group of growth factors. Moreover, we analyse whether Spanish provinces have converged in economic terms in the past decades. The second objective is to overcome the problems of model uncertainty and robustness of estimated parameters in growth regressions using cross-section and panel data techniques. For this purpose, we use a Bayesian Model Averaging (BMA) approach. The Bayesian methodology constructs parameter estimates as a weighted average of linear regression estimates for every possible combination of included variables. The weight of each regression estimates is given by the posterior probability of each model. This technique allows us to obtain parameter estimates that are robust to model specification.

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Paper provided by Instituto de Estudios Fiscales in its series Working Papers with number 13-03 Classification-JEL : O4, H5, C11.

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Handle: RePEc:hpe:wpaper:y:2003:i:13

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Keywords: Growth; Convergence; Public Investment; Bayesian Model Averaging;

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Citations

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Cited by:
  1. Eicher, Theo S. & Papageorgiou, Chris & Roehn, Oliver, 2007. "Unraveling the fortunes of the fortunate: An Iterative Bayesian Model Averaging (IBMA) approach," Journal of Macroeconomics, Elsevier, Elsevier, vol. 29(3), pages 494-514, September.
  2. DANIELE, Vittorio, 2009. "Development Policy, Public Spending and Regional Convergence in Italy (1996-2007)," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 9(2).
  3. Prüfer, P. & Tondl, G., 2008. "The FDI-Growth Nexus in Latin America: The Role of Source Countries and Local Conditions," Discussion Paper, Tilburg University, Center for Economic Research 2008-61, Tilburg University, Center for Economic Research.
  4. Magnus, Jan R. & Powell, Owen & Prüfer, Patricia, 2010. "A comparison of two model averaging techniques with an application to growth empirics," Journal of Econometrics, Elsevier, Elsevier, vol. 154(2), pages 139-153, February.
  5. Daniele VITTORIO, 2009. "Public Spending And Regional Convergence In Italy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(2(8)_Summ).
  6. Jesus Crespo-Cuaresma & Neil Foster-McGregor & Robert Stehrer, 2009. "The Determinants of Regional Economic Growth by Quantile," wiiw Working Papers, The Vienna Institute for International Economic Studies, wiiw 54, The Vienna Institute for International Economic Studies, wiiw.

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