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Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach

  • Gernot Doppelhofer
  • Ronald I. Miller
  • Xavier Sala-i-Martin

This paper examines the robustness of explanatory variables in cross-country economic growth regressions. It employs a novel approach, Bayesian Averaging of Classical Estimates (BACE), which constructs estimates as a weighted average of OLS estimates for every possible combination of included variables. The weights applied to individual regressions are justified on Bayesian grounds in a way similar to the well-known Schwarz criterion. Of 32 explanatory variables we find 11 to be robustly partially correlated with long-term growth and another five variables to be marginally related. Of all the variables considered, the strongest evidence is for the initial level of real GDP per capita.

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File URL: http://www.nber.org/papers/w7750.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7750.

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Date of creation: Jun 2000
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Publication status: published as Xavier Sala-I-Martin & Gernot Doppelhofer & Ronald I. Miller, 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," American Economic Review, American Economic Association, vol. 94(4), pages 813-835, September.
Handle: RePEc:nbr:nberwo:7750
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