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Cross-country growth regressions: problems of heterogeneity, stability and interpretation

Author

Listed:
  • G. S. Maddala
  • S. Wu

Abstract

The paper discusses the issues of heterogeneity and stability of cross-country growth regressions that have been used to study the problem of convergence. Almost all studies use pooled regressions. The paper considers the issue of pooling under heterogeneity using a hierarchical Bayesian method and estimates growth regressions for different panels studied in earlier papers, and different regimes. The conclusion is that the convergence rates are higher than those obtained from pooled regressions under the assumption of homogeneity and that there is instability over time in the relationships.

Suggested Citation

  • G. S. Maddala & S. Wu, 2000. "Cross-country growth regressions: problems of heterogeneity, stability and interpretation," Applied Economics, Taylor & Francis Journals, vol. 32(5), pages 635-642.
    • Handle: RePEc:taf:applec:v:32:y:2000:i:5:p:635-642
    DOI: 10.1080/000368400322534
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    References listed on IDEAS

    as
    1. Quah, Danny, 1994. "Convergence Empirics Across Economies with (Some) Capital Mobility," CEPR Discussion Papers 954, C.E.P.R. Discussion Papers.
    2. Fabio Canova & Albert Marcet, 1995. "The poor stay poor: Non-convergence across countries and regions," Economics Working Papers 137, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 1999.
    3. Lee, K. & Psaran, M.H. & Smith, R., 1995. "Growth and Convergence: A Multi-Country Empirical Analysis of the Solow Growth Model," Cambridge Working Papers in Economics 9531, Faculty of Economics, University of Cambridge.
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