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Growth Determinants Revisited

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  • Charalambos G Tsangarides
  • Alin T Mirestean

Abstract

This paper revisits the cross-country growth empirics debate using a novel Limited Information Bayesian Model Averaging framework to address model uncertainty in the context of a dynamic growth model in panel data with endogenous regressors. Our empirical findings suggest that once model uncertainty is accounted for there is strong evidence that initial income, investment, life expectancy, and population growth are robustly correlated with economic growth. We also find evidence that debt, openness, and inflation are robust growth determinants. Overall, the set of our robust growth determinants differs from those identified by other studies that incorporate model uncertainty, but ignore dynamics and/or endogeneity. This underscores the importance of accounting for model uncertainty and endogeneity in the investigation of growth determinants.

Suggested Citation

  • Charalambos G Tsangarides & Alin T Mirestean, 2009. "Growth Determinants Revisited," IMF Working Papers 09/268, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:09/268
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    Cited by:

    1. Antonio David & Fabiano Rodrigues Rodrigues Bastos & Marshall Mills, 2011. "Post-Conflict Recovery; Institutions, Aid, or Luck?," IMF Working Papers 11/149, International Monetary Fund.
    2. Eriṣ, Mehmet N. & Ulaṣan, Bülent, 2013. "Trade openness and economic growth: Bayesian model averaging estimate of cross-country growth regressions," Economic Modelling, Elsevier, vol. 33(C), pages 867-883.
    3. Gilles Dufrenot & Valerie Mignon & Charalambos Tsangarides, 2010. "The trade-growth nexus in the developing countries: a quantile regression approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(4), pages 731-761, December.
    4. Ho, Sin-Yu, 2018. "Determinants of Economic Growth in Hong Kong: The Role of Stock Market Development," MPRA Paper 88788, University Library of Munich, Germany.
    5. Eicher, Theo S. & Helfman, Lindy & Lenkoski, Alex, 2012. "Robust FDI determinants: Bayesian Model Averaging in the presence of selection bias," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 637-651.
    6. Ulaşan, Bülent, 2012. "Cross-country growth empirics and model uncertainty: An overview," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 6, pages 1-69.
    7. Michael Jetter & Bei Li, 2017. "The Political Economy of Opposition Groups: Peace, Terrorism, or Civil Conflict," CESifo Working Paper Series 6747, CESifo Group Munich.
    8. Ho, Sin-Yu & Njindan Iyke, Bernard, 2018. "The Determinants of Economic Growth in Ghana: New Empirical Evidence," MPRA Paper 87123, University Library of Munich, Germany.
    9. repec:eee:wdevel:v:109:y:2018:i:c:p:279-294 is not listed on IDEAS
    10. Okabe, Tomohito & Kam, Timothy, 2017. "Regional economic growth disparities: A political economy perspective," European Journal of Political Economy, Elsevier, vol. 46(C), pages 26-39.
    11. Grekou, Carl, 2015. "Revisiting the nexus between currency misalignments and growth in the CFA Zone," Economic Modelling, Elsevier, vol. 45(C), pages 142-154.
    12. Ho, Sin-Yu, 2018. "Analysing the Sources of Growth in an Emerging Market Economy: The Thailand Experience," MPRA Paper 86337, University Library of Munich, Germany.
    13. Jetter, Michael & Laudage, Sabine & Stadelmann, David, 2016. "The Intimate Link between Income Levels and Life Expectancy: Global Evidence from 213 Years," IZA Discussion Papers 10015, Institute for the Study of Labor (IZA).
    14. Moral-Benito, Enrique, 2010. "Model averaging in economics," MPRA Paper 26047, University Library of Munich, Germany.
    15. Michael Jetter, 2013. "Volatility and Growth: An Explanation for the Disagreement," DOCUMENTOS DE TRABAJO CIEF 010944, UNIVERSIDAD EAFIT.
    16. Iyke, Bernard Njindan & Ho, Sin-Yu, 2017. "Income Inequality and Growth: New Insights from Italy," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 70(4), pages 419-442.
    17. Jetter, Michael, 2016. "Peace, Terrorism, or Civil Conflict? Understanding the Decision of an Opposition Group," IZA Discussion Papers 9996, Institute for the Study of Labor (IZA).
    18. Jetter, Michael, 2014. "Volatility and growth: Governments are key," European Journal of Political Economy, Elsevier, vol. 36(C), pages 71-88.
    19. Islam, Md. Rabiul & Madsen, Jakob B. & Raschky, Paul A., 2015. "Gold and silver mining in the 16th and 17th centuries, land titles and agricultural productivity," European Journal of Political Economy, Elsevier, vol. 39(C), pages 150-166.
    20. E. Tsanana & X. Chapsa & C. Katrakilidis, 2016. "Is growth corrupted or bureaucratic? Panel evidence from the enlarged EU," Applied Economics, Taylor & Francis Journals, vol. 48(33), pages 3131-3147, July.
    21. Ajit Karnik & Mala Lalvani, 2012. "Growth performance of Indian states," Empirical Economics, Springer, vol. 42(1), pages 235-259, February.

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