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Multiple Testing Techniques in Growth Econometrics

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  • Deckers, Thomas
  • Hanck, Christoph

Abstract

This paper discusses two longstanding questions in growth econometrics which involve multiple hypothesis testing. In cross sectional GDP growth regressions many variables are simultaneously tested for significance. Similarly, when investigating pairwise convergence of output for $n$ countries, $n(n-1)/2$ tests are performed. We propose to control the false discovery rate (FDR) so as not to erroneously declare variables significant in these multiple testing situations only because of the large number of tests performed. Doing so, we provide a simple new way to robustly select variables in economic growth models. We find that few other variables beyond the initial GDP level are needed to explain growth. We also show that convergence of per capita output using a time series definition with the necessary condition of no unit root in the log per-capita output gap of two economies does not appear to hold

Suggested Citation

  • Deckers, Thomas & Hanck, Christoph, 2009. "Multiple Testing Techniques in Growth Econometrics," MPRA Paper 17843, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:17843
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    File URL: https://mpra.ub.uni-muenchen.de/17843/1/MPRA_paper_17843.pdf
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    References listed on IDEAS

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    Cited by:

    1. Hanck, Christoph, 2011. "Now, whose schools are really better (or weaker) than Germany's? A multiple testing approach," Economic Modelling, Elsevier, vol. 28(4), pages 1739-1746, July.
    2. Smeekes Stephan, 2011. "Bootstrap Sequential Tests to Determine the Stationary Units in a Panel," Research Memorandum 003, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).

    More about this item

    Keywords

    Growth Empirics; Multiple Testing; Convergence; Bootstrap;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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