Growth Determinants Revisited
IMF Working Papers, December 1, 2009
Source details
- Canonical URL
- Growth Determinants Revisited
Other formats
Bibliographic details
- Authors: Charalambos G Tsangarides, Alin T Mirestean
- Published: December 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451874136.001
Summary
- The paper revisits the cross-country growth empirics debate using a novel Limited Information Bayesian Model Averaging framework to address model uncertainty in the context of a dynamic growth model in panel data with endogenous regressors.
- Once model uncertainty is accounted for there is strong evidence that initial income, investment, life expectancy, and population growth are robustly correlated with economic growth.
- The authors also find evidence that debt, openness, and inflation are robust growth determinants.
- The set of robust growth determinants found in this paper differs from those identified by other studies that incorporate model uncertainty but ignore dynamics and/or endogeneity.
- The findings underscore the importance of accounting for model uncertainty and endogeneity in the investigation of growth determinants.
Methodology
- Framework used: Limited Information Bayesian Model Averaging.
- Context: dynamic growth model in panel data with endogenous regressors.
- Purpose: to address model uncertainty while explicitly accounting for dynamics and endogeneity.
Key empirical findings
- Robustly correlated with economic growth:
- initial income
- investment
- life expectancy
- population growth
- Additional robust determinants identified:
- debt
- openness
- inflation
- Comparative result:
- The identified robust determinants differ from those in studies that ignore dynamics and/or endogeneity even when they incorporate model uncertainty.