The Africa-Dummy in Growth Regressions

Max Köhler, Stefan Sperlich () and Julian Vortmeyer
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Max Köhler: Georg-August-University Göttingen
Julian Vortmeyer: Georg-August-University Göttingen

No 94, Courant Research Centre: Poverty, Equity and Growth - Discussion Papers from Courant Research Centre PEG

Abstract: The Africa-Dummy has been identfi ed and diff erent explanations for its appearance have been published. In this paper, the issue of the empirical identifcation of the Africa-Dummy is addressed. We introduce a fixed eff ects regression model to identify the Africa-Dummy in one regression step so that its correlations to other coeffcients can be estimated. A semiparametric extension of this model checks whether the Africa-Dummy is a result of misspecifi cation of the functional structure. Furthermore, we show that sub-Saharan African countries have a positive return to the population growth and when adding interaction e ffects, the Africa-Dummy is even positive. Moreover, we show that the Africa-Dummy changes dramatically over time and the punishment for sub-Saharan African countries decreases incrementally since the mid-nineties. According to the Augmented Solow Growth model, it was even insignificant since the end-nineties.

Date: 2011-09-06
New Economics Papers: this item is included in nep-afr and nep-dev
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