Endogeneity and Panel Data in Growth Regressions: A Bayesian Model Averaging Approach
AbstractBayesian model averaging (BMA) has been successfully applied in the empirical growth literature as a way to overcome the sensitivity of results to different model specifications. In this paper, we develop a BMA technique to analyze models that differ in the set of instruments, exogeneity restrictions, or the set of controlling regressors. Our framework allows for both cross-section regressions with instrumental variables and for the commonly used panel data model with xed effects and endogenous or predetermined regressors. The large model space that typically arises can be effectively analyzed using a Markov Chain Monte Carlo algorithm. We apply our technique to the dataset used by Burnside and Dollar (2000) who investigated the e ect of international aid on GDP growth. We show that BMA is an e ective tool for the analysis of panel data growth regressions in cases where the number of models is large and results are sensitive to model assumptions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Graduate Institute for Policy Studies in its series GRIPS Discussion Papers with number 12-08.
Length: 31 pages
Date of creation: Sep 2012
Date of revision:
Contact details of provider:
Postal: 7-22-1 Roppongi, Minato-ku, Tokyo, Japan 106-8677
Web page: http://r-center.grips.ac.jp/DiscussionPapers
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-22 (All new papers)
- NEP-ECM-2012-09-22 (Econometrics)
- NEP-FDG-2012-09-22 (Financial Development & Growth)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Huigang Chen & Alin Mirestean & Charalambos G. Tsangarides, 2011. "Limited Information Bayesian Model Averaging for Dynamic Panels with an Application to a Trade Gravity Model," IMF Working Papers 11/230, International Monetary Fund.
- Ciccone, Antonio & Jarociński, Marek, 2008.
"Determinants of economic growth: will data tell?,"
Working Paper Series
0852, European Central Bank.
- Ciccone, Antonio & Jarocinski, Marek, 2007. "Determinants of Economic Growth: Will Data Tell?," CEPR Discussion Papers 6544, C.E.P.R. Discussion Papers.
- Antonio Ciccone & Marek Jarocinski, 2010. "Determinants of Economic Growth. Will Data Tell?," Working Papers 1009, BBVA Bank, Economic Research Department.
- Antonio Ciccone & Marek Jarocinski, 2007. "Determinants of economic growth: Will data tell?," Economics Working Papers 1052, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2009.
- Marek Jarocinski & Antonio Ciccone, 2009. "Determinants of Economic Growth: Will Data Tell?," Working Papers 2009-36, FEDEA.
- Carmen Fernandez & E Ley & Mark F J Steel, 2004.
"Benchmark priors for Bayesian models averaging,"
ESE Discussion Papers
66, Edinburgh School of Economics, University of Edinburgh.
- Doppelhofer, G. & Weeks, M., 2005.
"Jointness of Growth Determinants,"
Cambridge Working Papers in Economics
0542, Faculty of Economics, University of Cambridge.
- Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
- Koop, Gary & Tole, Lise, 2004. "Measuring the health effects of air pollution: to what extent can we really say that people are dying from bad air?," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 30-54, January.
- Arellano, Manuel, 2003. "Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780199245291.
- repec:ner:carlos:info:hdl:10016/4655 is not listed on IDEAS
- Hristos Doucouliagos & Martin Paldam, 2005.
"Conditional Aid Effectiveness. A Meta Study,"
Economics Working Papers
2005-14, School of Economics and Management, University of Aarhus.
- Ethan Cohen-Cole & Steven Durlauf & Jeffrey Fagan & Daniel Nagin, 2007. "Model uncertainty and the deterrent effect of capital punishment," Risk and Policy Analysis Unit Working Paper QAU07-3, Federal Reserve Bank of Boston.
- repec:ner:louvai:info:hdl:2078.1/88102 is not listed on IDEAS
- Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
- Roberto Leon-Gonzalez & Thanabalasingam Vinayagathasan, 2013. "Robust Determinants of Growth in Asian Developing Economies: A Bayesian Panel Data Model Averaging Approach," GRIPS Discussion Papers 13-12, National Graduate Institute for Policy Studies.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.