We have just averaged over two trillion cross-country growth regressions

Carmen Fernandez, Eduardo Ley and Mark Steel ()

ESE Discussion Papers from Edinburgh School of Economics, University of Edinburgh

Abstract: We investigate the issue of model uncertainty in cross-country growth regressions using Bayesian model averaging (BMA). We find that the posterior probability is very spread among many models suggesting the superiority of BMA over choosing any single model. Out-of-sample predictive results support that claim. In contrast with Levine and Renelt (1992), our results broadly support the more "optimistic'' conclusion of Sala-i-Martin (1997b), namely that some variables are important regressors for explaining cross-country growth patterns. However, the variables we identify as most useful for growth regression differ substantially from his results.

Date: 2004-04
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Persistent link: http://EconPapers.repec.org/RePEc:edn:esedps:43

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