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An Empirical Investigation into the Causes of Economic Growth in the Third World Using Full Information Maximum Likelihood Estimators

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  • Saltz, Ira
  • Cebula, Richard

Abstract

Many empirical studies of economic growth in Third World countries are cross-national studies that have adopted single-equation OLS estimation to identify the determinants of economic growth. The problem with such an approach is that it often suffers from simultaneity bias. The present study adopts Full Information Maximum Likelihood Estimators. The analysis in this paper reveals that simultaneity must not be dismissed and that the conclusions drawn from standard OLS analysis are to be interpreted carefully and in many cases not taken seriously.

Suggested Citation

  • Saltz, Ira & Cebula, Richard, 1997. "An Empirical Investigation into the Causes of Economic Growth in the Third World Using Full Information Maximum Likelihood Estimators," MPRA Paper 54573, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:54573
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    References listed on IDEAS

    as
    1. Michaely, Michael, 1977. "Exports and growth : An empirical investigation," Journal of Development Economics, Elsevier, vol. 4(1), pages 49-53, February.
    2. Heller, Peter S. & Porter, Richard C., 1978. "Exports and growth : An empirical re-investigation," Journal of Development Economics, Elsevier, vol. 5(2), pages 191-193, June.
    3. Humphries, Jane, 1976. "Causes of Growth," Economic Development and Cultural Change, University of Chicago Press, vol. 24(2), pages 339-353, January.
    4. Jorgenson, Dale W, 1971. "Econometric Studies of Investment Behavior: A Survey," Journal of Economic Literature, American Economic Association, vol. 9(4), pages 1111-1147, December.
    5. Chenery, Hollis & Taylor, Lance, 1968. "Development Patterns: Among Countries And Over Time," Center for International Affairs (CIA) Archive 294545, Harvard University, Center for International Affairs.
    6. Ram, Rati, 1990. "Imports and Economic Growth: A Cross-Country Study," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 43(1), pages 45-66.
    7. Esfahani, Hadi Salehi, 1991. "Exports, imports, and economic growth in semi-industrialized countries," Journal of Development Economics, Elsevier, vol. 35(1), pages 93-116, January.
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    Cited by:

    1. Modinat O. Olusoji, 2016. "A cross causal analysis of employment and economic growth in Nigeria," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 59(4), pages 553-562, December.

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    More about this item

    Keywords

    simultaneity bias; full information maximum likelihood estimators;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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