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Growth and investment across countries

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  • Jess Benhabib
  • Mark M. Spiegel

Abstract

This paper examines the channels through which country characteristics affect growth. We investigate whether "primitives," or rates of factor accumulation, are sufficient statistics for economic growth, and whether "ancillary variables," such as political instability, income distribution, and financial development, affect growth by influencing levels of investment in physical and human capital. Our results suggest that financial development is an important determinant of both total factor productivity growth and levels of investment. Political instability is also found to influence levels of physical capital accumulation. However, the impact of many of the ancillary variables on levels of investment are not very robust to the inclusion of country fixed effects.

Suggested Citation

  • Jess Benhabib & Mark M. Spiegel, 1997. "Growth and investment across countries," Working Papers in Applied Economic Theory 97-03, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfap:97-03
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    File URL: http://www.frbsf.org/econrsrch/workingp/wp97-11a.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Fabrizio Carmignani, 2001. "Theory and Evidence on the Political Economy of Growth," Working Papers 33, University of Milano-Bicocca, Department of Economics, revised Jan 2001.
    2. Kopp, Andreas, 2000. "City size distribution and growth," HWWA Discussion Papers 97, Hamburg Institute of International Economics (HWWA).
    3. Sherif Khalifa & Sherine El Hag, 2010. "Income Disparities, Economic Growth, And Development As A Threshold," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(2), pages 23-36, June.
    4. Papyrakis, Elissaios & Gerlagh, Reyer, 2007. "Resource abundance and economic growth in the United States," European Economic Review, Elsevier, vol. 51(4), pages 1011-1039, May.

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