Cross-country growth empirics and model uncertainty: An overview

Bülent Ulaşan

No 2011-37, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: The aim of this paper is to provide an overview of empirical cross-country growth literature. The paper begins with describing the basic framework used in recent empirical cross-country growth research. Even though this literature was mainly inspired by endogenous growth theories, the neoclassical growth model is still the workhorse for cross-country growth empirics. The second part of the paper emphasises model uncertainty, which is indeed immense but generally neglected in the empirical cross-country growth literature. The most outstanding feature of the literature is that a large number of factors have been suggested as fundamental growth determinants. Together with the small sample property, this leads to an important problem: model uncertainty. The questions which factors are more fundamental in explaining growth dynamics and hence growth differences are still the subject of academic research. Recent attempts based on general-to-specific modeling or model averaging are promising but have their own limits. Finally, the paper highlights the implications of model uncertainty for policy evaluation.

Keywords: Economic growth; convergence; cross-country growth; regression; model uncertainty; policy evaluation (search for similar items in EconPapers)
JEL-codes: O40 O47 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-fdg
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https://www.econstor.eu/bitstream/10419/49538/1/668118369.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201137

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