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Growth Determinants Revisited

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Author Info

  • Charalambos G. Tsangarides
  • Alin Mirestean

Abstract

This paper revisits the cross-country growth empirics debate using a novel Limited Information Bayesian Model Averaging framework to address model uncertainty in the context of a dynamic growth model in panel data with endogenous regressors. Our empirical findings suggest that once model uncertainty is accounted for there is strong evidence that initial income, investment, life expectancy, and population growth are robustly correlated with economic growth. We also find evidence that debt, openness, and inflation are robust growth determinants. Overall, the set of our robust growth determinants differs from those identified by other studies that incorporate model uncertainty, but ignore dynamics and/or endogeneity. This underscores the importance of accounting for model uncertainty and endogeneity in the investigation of growth determinants.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/268.

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Length: 33
Date of creation: 01 Dec 2009
Date of revision:
Handle: RePEc:imf:imfwpa:09/268

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Related research

Keywords: Economic growth; Economic conditions; Economic models; Human capital; probability; econometrics; probabilities; equation; growth model; logarithm; statistics; dynamic panel; difference equation; growth regressions; sample size; dynamic panel data; standard error; random error; growth regression; financial statistics; surveys; equations; cross section analysis; dynamic panel data models; hypothesis testing; linear regression; linear regression model; normal distribution; random variable; samples; cross section analyses; econometric analysis of cross section; cross-country growth regression; cross-country growth regressions; country growth regressions; bayes factors; dynamic panels; nested hypotheses; econometric estimates; country growth regression; instrumental variables; monte carlo simulations; computation; sample sizes; growth models; statistical significance; panel data econometrics; sampling; instrumental variable; regression model; survey; statistical theory; bayesian information criterion; dummy variables; number of variables; standard deviation; bayes factor; econometric analysis; correlation; difference ? equation;

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Citations

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Cited by:
  1. Antonio David & Fabiano Rodrigues Bastos & Marshall Mills, 2011. "Post-Conflict Recovery," IMF Working Papers 11/149, International Monetary Fund.
  2. Jetter, Michael, 2013. "Volatility and Growth: Governments are Key," IZA Discussion Papers 7826, Institute for the Study of Labor (IZA).
  3. Eicher, Theo S. & Helfman, Lindy & Lenkoski, Alex, 2012. "Robust FDI determinants: Bayesian Model Averaging in the presence of selection bias," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 637-651.
  4. Eriṣ, Mehmet N. & Ulaṣan, Bülent, 2013. "Trade openness and economic growth: Bayesian model averaging estimate of cross-country growth regressions," Economic Modelling, Elsevier, vol. 33(C), pages 867-883.
  5. Ulaşan, Bülent, 2012. "Cross-country growth empirics and model uncertainty: An overview," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(16), pages 1-69.
  6. Gilles Dufrénot & Valérie Mignon & Charalambos Tsangarides, 2009. "The Trade-Growth Nexus in the Developing Countries: a Quantile Regression Approach," Working Papers 2009-04, CEPII research center.
  7. Michael Jetter, 2013. "Volatility and Growth: An Explanation for the Disagreement," DOCUMENTOS DE TRABAJO CIEF 010944, UNIVERSIDAD EAFIT.
  8. Ajit Karnik & Mala Lalvani, 2012. "Growth performance of Indian states," Empirical Economics, Springer, vol. 42(1), pages 235-259, February.
  9. Enrique Moral-Benito, 2010. "Model Averaging In Economics," Working Papers wp2010_1008, CEMFI.
  10. Carl Grekou, 2014. "Revisiting the nexus between currency misalignments and growth in the CFA Zone," EconomiX Working Papers 2014-4, University of Paris West - Nanterre la Défense, EconomiX.

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