National Policies and Economic Growth: A Reappraisal

William Easterly

No 27, Working Papers from Center for Global Development

Abstract: National economic policies’ effects on growth were over-emphasized in the early literature on endogenous economic growth. Most of the early theoretical models of the new growth literature (and even their new neoclassical counterparts) predicted large policy effects, which was followed by empirical work showing large effects. A reappraisal finds that the alleged association between growth and policies does not explain many stylized facts of the postwar era, depends on the extreme policy observations, that the association is not robust to different estimation methods (pooled vs. fixed effects vs. cross-section), does not show up as expected in event studies of trade openings and inflation stabilizations, and is driven out by institutional variables in levels regressions.

Keywords: economic policy; economic growth (search for similar items in EconPapers)
JEL-codes: O10 O21 O40 O47 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2003-05
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Citations: View citations in EconPapers (29)

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Chapter: National Policies and Economic Growth: A Reappraisal (2005)
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