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Determinants of Economic Growth: A Bayesian Panel Data Approach

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  • Moral-Benito, Enrique

    () (CEMFI)

Abstract

Model uncertainty hampers consensus on the key determinants of economic growth. Some recent cross-country, cross-sectional analyses have employed Bayesian Model Averaging to address the issue of model uncertainty. This paper extends that approach to panel data models with country-specific fixed effects. The empirical results show that the most robust growth determinants are the price of investment goods, distance to major world cities, and political rights. This suggests that growth-promoting policy strategies should aim to reduce taxes and distortions that raise the prices of investment goods; improve access to international markets; and promote democracy-enhancing institutional reforms. Moreover, the empirical results are robust to different prior assumptions on expected model size.

Suggested Citation

  • Moral-Benito, Enrique, 2009. "Determinants of Economic Growth: A Bayesian Panel Data Approach," Policy Research Working Paper Series 4830, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4830
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    References listed on IDEAS

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    More about this item

    Keywords

    accounting; Average growth; Average growth rate; benchmark; calculations; capital accumulation; civil liberties; conditional convergence; Contribution; convergence parameter; country regressions;

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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