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Growth miracles and failures in a Markov switching classification model of growth

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  • Kerekes, Monika

Abstract

In this paper economic growth is interpreted as a sequence of transitions between distinct growth regimes that countries visit with different frequencies. Countries featuring similar growth dynamics are endogenously grouped into three different clusters. The first cluster comprises successful countries that are characterized by lengthy periods of high or very high growth. Moderately successful countries in the second cluster experience both periods of reasonable growth and periods of stagnation, whereas failing countries in the third cluster suffer from highly volatile growth rates with frequent episodes of crisis. Successful countries are characterized by better initial conditions, policies and institutions compared to the other countries. Neither initial conditions nor institutions distinguish moderately successful from failing countries; what makes them different is policy in the form of investments into infrastructure and human capital, trade liberalization and limited policy volatility.

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  • Kerekes, Monika, 2012. "Growth miracles and failures in a Markov switching classification model of growth," Journal of Development Economics, Elsevier, vol. 98(2), pages 167-177.
  • Handle: RePEc:eee:deveco:v:98:y:2012:i:2:p:167-177 DOI: 10.1016/j.jdeveco.2011.06.012
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    Cited by:

    1. Kevin S. Nell & Maria M. De Mello, 2015. "Testing Capital Accumulation-Driven Growth Models in a Multiple-Regime Framework: Evidence from South Africa," CEF.UP Working Papers 1501, Universidade do Porto, Faculdade de Economia do Porto.
    2. Kunal Sen, 2014. "Inclusive Growth: When May We Expect It? When May We Not?," Asian Development Review, MIT Press, vol. 31(1), pages 136-162, March.
    3. Owen, Ann L. & Videras, Julio, 2012. "The quality of growth," MPRA Paper 38342, University Library of Munich, Germany.
    4. Sen, Kunal, 2013. "The Political Dynamics of Economic Growth," World Development, Elsevier, vol. 47(C), pages 71-86.
    5. Ann L. Owen & Julio Videras, 2016. "Classifying Human Development with Latent Class Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(3), pages 959-981, July.
    6. Pál Czeglédi, 2014. "The theory of interventionism as an Austrian theory of slowdowns," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 27(4), pages 419-449, December.

    More about this item

    Keywords

    Economic growth; Regime switching; Latent class models;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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