{
  "title": "Sharp Instrument: A Stab at Identifying the Causes of Economic Growth",
  "publication": "IMF Working Papers, May 21, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2018/05/21/sharp-instrument-a-stab-at-identifying-the-causes-of-economic-growth-45879",
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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.",
  "sections": [
    {
      "heading": "Authors and publication",
      "content": "- By Reda Cherif, Fuad Hasanov, Lichen Wang\n- May 21, 2018\n- IMF Working Papers, Working Paper No. 2018/117\n- Pages: 24\n- Volume: 2018\n- Issue: 117\n- DOI: https://doi.org/10.5089/9781484357170.001\n- Stock No: WPIEA2018117\n- ISBN: 9781484357170\n- ISSN: 1018-5941"
    },
    {
      "heading": "Research objective and methodology",
      "content": "- Objective: Shed new light on the determinants of growth by addressing the blunt and weak instrument problems in the empirical growth literature.\n- Instrumental strategy:\n  - Propose average values of the same endogenous variable in neighboring countries as an instrument for each endogenous variable.\n  - Characterize these instruments as variable-specific and time-varying—namely, “sharp”—and strong."
    },
    {
      "heading": "Key findings",
      "content": "- Export sophistication is identified as the only robust determinant of growth among the standard growth determinants examined.\n- Other standard determinants considered include:\n  - Human capital\n  - Trade\n  - Financial development\n  - Institutions\n- Implication from results:\n  - Other growth determinants may be important to the extent they help improve export sophistication."
    },
    {
      "heading": "Keywords and subject coverage",
      "content": "- Subject: Econometric analysis, Economic sectors, Education, Estimation techniques, Exports, International trade, Manufacturing, National accounts, Real exports\n- Keywords: blunt instrument, coefficient estimate, Economic growth, Estimation techniques, export orientation, export sophistication, Exports, growth rate, IV estimation, manufactures export, Manufacturing, Productivity, Real exports, Sub-Saharan Africa, t-test size, test p-value, Weak instrument, WP"
    },
    {
      "heading": "Core takeaway for policy and research",
      "content": "- Focus on policies and interventions that improve export sophistication, as this characteristic is found to be the robust driver of economic growth in the authors’ empirical framework.\n- Use of neighboring-country averages as variable-specific, time-varying instruments provides a methodological approach to mitigate blunt and weak instrument problems in growth regressions.\n\nSource: IMF Working Paper “Sharp Instrument: A Stab at Identifying the Causes of Economic Growth” by Reda Cherif, Fuad Hasanov, and Lichen Wang (May 21, 2018), Working Paper No. 2018/117.\n\n---\n\n Content in this bundle\n\n- Sharp Instrument: A Stab at Identifying the Causes of Economic Growth, WP/18/117, May 2018\n  - Sharp Instrument: A Stab at Identifying the Causes of Economic Growth, WP/18/117, May 2018 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Sharp Instrument: A Stab at Identifying the Causes of Economic Growth, WP/18/117, May 2018 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/05/21/sharp-instrument-a-stab-at-identifying-the-causes-of-economic-growth-45879"
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    "Authors: Reda Cherif, Fuad Hasanov, Lichen Wang",
    "Published: May 21, 2018",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484357170.001",
    "By Reda Cherif, Fuad Hasanov, Lichen Wang",
    "May 21, 2018",
    "IMF Working Papers, Working Paper No. 2018/117",
    "Pages: 24",
    "Volume: 2018",
    "Issue: 117",
    "DOI: https://doi.org/10.5089/9781484357170.001",
    "Stock No: WPIEA2018117",
    "ISBN: 9781484357170",
    "ISSN: 1018-5941",
    "Objective: Shed new light on the determinants of growth by addressing the blunt and weak instrument problems in the empirical growth literature.",
    "Instrumental strategy:",
    "Export sophistication is identified as the only robust determinant of growth among the standard growth determinants examined.",
    "Other standard determinants considered include:",
    "Implication from results:",
    "Subject: Econometric analysis, Economic sectors, Education, Estimation techniques, Exports, International trade, Manufacturing, National accounts, Real exports",
    "Keywords: blunt instrument, coefficient estimate, Economic growth, Estimation techniques, export orientation, export sophistication, Exports, growth rate, IV estimation, manufactures export, Manufacturing, Productivity, Real exports, Sub-Saharan Africa, t-test size, test p-value, Weak instrument, WP",
    "Focus on policies and interventions that improve export sophistication, as this characteristic is found to be the robust driver of economic growth in the authors’ empirical framework.",
    "Use of neighboring-country averages as variable-specific, time-varying instruments provides a methodological approach to mitigate blunt and weak instrument problems in growth regressions.",
    "**Sharp Instrument: A Stab at Identifying the Causes of Economic Growth, WP/18/117, May 2018**"
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