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Should we care about the uncertainty around measures of political-economic development?

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  • Desbordes, Rodolphe
  • Koop, Gary

Abstract

Several proxies of political–economic development, such as the Worldwide Governance Indicators, come in the form of an estimate along with a standard error reflecting the uncertainty of this estimate. Existing empirical work discards the information provided by the standard errors. We argue that the appropriate practice should be to take into account this additional information through the use of multiple imputation. We investigate the importance of our proposed approach in several applications. We find that accounting for the uncertainty around the values of various measures of political–economic development tends to have a large influence on the magnitude and statistical significance of the estimated effects of these variables.

Suggested Citation

  • Desbordes, Rodolphe & Koop, Gary, 2016. "Should we care about the uncertainty around measures of political-economic development?," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 752-763.
  • Handle: RePEc:eee:jcecon:v:44:y:2016:i:3:p:752-763
    DOI: 10.1016/j.jce.2015.08.002
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    More about this item

    Keywords

    Democracy; Income inequality; Governance; Multiple imputation; Uncertainty;

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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