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Determinants of Growth Spells

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  • Charalambos G. Tsangarides

Abstract

Do growth spells in Africa end because of bad realizations of the same factors that influence growth spells in the rest of the world, or because of different factors altogether? To answer this question, we examine determinants of growth spells in Africa and the rest of the world using Bayesian Mode Averaging techniques for proportional hazards models. We define growth spells as periods of sustained growth episodes between growth accelerations and decelerations and then relate the probability that a growth spell ends to various determinants including exogenous shocks, physical and human capital, macroeconomic policy, and sociopolitical factors. Our analysis suggests that determinants of growth spells in Africa are different from those in the rest of the world. The majority of the identified robust determinants have a distinct impact in only one of the two samples: initial income, terms of trade, exchange rate undervaluation and inflation, influence spells only in the world sample, while openness and droughts seem to only affect Africa. In addition, a few common determinants - proxies for human and physical capital and changes in the world interest rate - have very different marginal effects in the two samples.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/227.

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Length: 32
Date of creation: 01 Sep 2012
Date of revision:
Handle: RePEc:imf:imfwpa:12/227

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Related research

Keywords: Economic growth; Economic models; terms of trade; inflation; trade growth; per capita income; terms of trade shocks; monetary economics; trade shocks; external shocks; trade liberalization; increased openness; export markets; import prices; export orientation; income distribution; oil prices; high inflation; impact of trade; low inflation; macroeconomic stability; trade policies; price level; rate of inflation; trade openness; inflation rates;

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  1. Joshua Aizenman & Mark M. Spiegel, 2007. "Takeoffs," Working Paper Series 2008-02, Federal Reserve Bank of San Francisco.
  2. Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," World Bank Economic Review, World Bank Group, vol. 22(2), pages 187-231, June.
  3. Levine, Ross, 1996. "Financial development and economic growth : views and agenda," Policy Research Working Paper Series 1678, The World Bank.
  4. Stanley Fischer, 1993. "The Role of Macroeconomic Factors in Growth," NBER Working Papers 4565, National Bureau of Economic Research, Inc.
  5. Elsa V. Artadi & Xavier Sala-i-Martin, 2003. "The Economic Tragedy of the XXth Century: Growth in Africa," NBER Working Papers 9865, National Bureau of Economic Research, Inc.
  6. Jerzmanowski, Michal, 2006. "Empirics of hills, plateaus, mountains and plains: A Markov-switching approach to growth," Journal of Development Economics, Elsevier, vol. 81(2), pages 357-385, December.
  7. Easterly, William & Kremer, Michael & Pritchett, Lant & Summers, Lawrence H., 1993. "Good policy or good luck?: Country growth performance and temporary shocks," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 459-483, December.
  8. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers 536, Harvard - Institute for International Development.
  9. Rodrik, Dani, 1999. " Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
  10. Dani Rodrik, 1998. "Trade Policy and Economic Performance in Sub-Saharan Africa," NBER Working Papers 6562, National Bureau of Economic Research, Inc.
  11. Alin Mirestean & Charalambos G. Tsangarides & Huigang Chen, 2009. "Limited Information Bayesian Model Averaging for Dynamic Panels with Short Time Periods," IMF Working Papers 09/74, International Monetary Fund.
  12. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  13. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
  14. Sanjeev Gupta & Catherine A. Pattillo & Kevin Joseph Carey, 2005. "Sustaining Growth Accelerations and Pro-Poor Growth in Africa," IMF Working Papers 05/195, International Monetary Fund.
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