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Operationalizing growth models

Author

Listed:
  • Lucio Baccaro

    (Max Planck Institute for the Study of Societies)

  • Sinisa Hadziabdic

    (Max Planck Institute for the Study of Societies)

Abstract

We introduce a novel approach to operationalizing growth models. Drawing on the most recent release of OECD Input–Output Tables, we compute the import-adjusted growth contributions of consumption, investment, government expenditures, and exports for sixty-six countries in the years 1995–2007 and 2009–2018, covering not only advanced Western economies but also Central and Eastern European, South-East Asian, and Latin American countries. We find that most are export-led or domestic demand-led and other forms of growth are rare. Our results differ from other classifications in that they reveal important geographical variation as well as temporal change. In a subsequent step, we illustrate the utility of the methodology by investigating the link between real exchange rate devaluation and export-led growth, a contentious issue in the existing literature. For pre-crisis advanced Western economies, we find an association between the two variables, which is statistically significant only when our new indicator is used.

Suggested Citation

  • Lucio Baccaro & Sinisa Hadziabdic, 2024. "Operationalizing growth models," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(2), pages 1325-1360, April.
    • Handle: RePEc:spr:qualqt:v:58:y:2024:i:2:d:10.1007_s11135-023-01685-w
    DOI: 10.1007/s11135-023-01685-w
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