Sharp Instrument: A Stab at Identifying the Causes of Economic Growth

Author/Editor:

Reda Cherif ; Fuad Hasanov ; Lichen Wang

Publication Date:

May 21, 2018

Electronic Access:

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Summary:

We shed new light on the determinants of growth by tackling the blunt and weak instrument problems in the empirical growth literature. As an instrument for each endogenous variable, we propose average values of the same variable in neighboring countries. This method has the advantage of producing variable-specific and time-varying—namely, “sharp”—and strong instruments. We find that export sophistication is the only robust determinant of growth among standard growth determinants such as human capital, trade, financial development, and institutions. Our results suggest that other growth determinants may be important to the extent they help improve export sophistication.

Series:

Working Paper No. 18/117

Subject:

English

Publication Date:

May 21, 2018

ISBN/ISSN:

9781484357170/1018-5941

Stock No:

WPIEA2018117

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

24

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