What Can Growth Rates Tell Us? A Short-Run Decomposition Method
AbstractConsider time series output data for two sectors, industry and agriculture. By examining just the output data themselves, what can we say about the relative impact of institutional/policy factors, intrasectoral competition for resources, and intersectoral linkages on each sector’s growth? Currently the answer might be very little. Our aim is to fill this gap: First, we explain how institutional/policy and other factors can be formally derived from a growth rate term. Second, we offer an empirical illustration of the derivation, such that just the time series output data of the two sectors by themselves contain enough information to make inferences regarding the relative impacts of the institutional/policy and other factors. Thus we provide the formal decomposition of a growth rate term, allowing the relative impacts of key explanatory variables to be estimated from a highly parsimonious data set. For countries that publish limited data sets, our method extends the ability of researchers to make inferences about the impact of institutions and so on, even when data on institutions are unavailable.
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Bibliographic InfoPaper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 12/14.
Length: 18 pages
Date of creation: 10 Dec 2012
Date of revision:
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short-run growth; growth decomposition; institutions and policies; China;
Find related papers by JEL classification:
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
- P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-22 (All new papers)
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