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No Need to Run Millions of Regressions

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  • Jan-Egbert Sturm

Abstract

We argue that in modelling cross-country growth models one should first identify so-called outlying observations. For the data set of Sala-i-Martin, we use the least median of squares (LMS) estimator to identify outliers. As LMS is not suited for inference, we then use reweighted least squares (RLS) for our cross-country growth models. We identify 27 variables that are significantly related to economic growth. Subsequently, applying Sala-i-Martin's approach for the data set without outliers hardly reveals any additional information. Variables that are insignificant according to the RLS method are generally not significantly related to economic growth under the Sala-i-Martin approach.

Suggested Citation

  • Jan-Egbert Sturm, 2000. "No Need to Run Millions of Regressions," CESifo Working Paper Series 288, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_288
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    File URL: http://www.cesifo-group.de/DocDL/cesifo_wp288.pdf
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    References listed on IDEAS

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    1. de Haan, Jakob & Sturm, Jan-Egbert, 2000. "On the relationship between economic freedom and economic growth," European Journal of Political Economy, Elsevier, vol. 16(2), pages 215-241, June.
    2. Leamer, Edward E, 1983. "Let's Take the Con Out of Econometrics," American Economic Review, American Economic Association, vol. 73(1), pages 31-43, March.
    3. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
    4. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
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    Citations

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    Cited by:

    1. Sturm, Jan-Egbert, 2001. "Determinants of public capital spending in less-developed countries," CCSO Working Papers 200107, University of Groningen, CCSO Centre for Economic Research.
    2. Shahdad Naghshpour, 2009. "Evidence of convergence in Eastern Europe: a quantile regression approach," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 2(2), pages 133-152.
    3. Alejandro Diaz-Bautista, 2005. "Convergence and Economic Growth considering Human Capital and R&D Spillovers Convergencia y Crecimiento Economico en Mexico considerando al Capital Humano y derrames en Investigacion y Desarrollo," Urban/Regional 0506012, EconWPA.

    More about this item

    Keywords

    Sensitivity analysis; outliers; economic growth;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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