 Sharp Instrument: A Stab at Identifying the Causes of Economic GrowthReda Cherif, Fuad Hasanov and Lichen Wang No 2018/117, IMF Working Papers from International Monetary Fund Abstract: 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. Keywords: WP; export sophistication; test p-value; blunt instrument; export orientation; IV estimation; Economic growth; Productivity; Weak instrument; t-test size; coefficient estimate; manufactures export; growth rate; Exports; Estimation techniques; Real exports; Manufacturing; Sub-Saharan Africa (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2018/117 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC. |
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