Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics

Günther Rehme

No 157, Royal Economic Society Annual Conference 2002 from Royal Economic Society

Abstract: This paper analyses the link between growth and public policy when the latter depends on economically important fundamentals. When policy is endogenous the measured effects of policy on growth will generally be biased. Using a widely quoted theoretical model, the signs of the biases are derived. It is shown that the usually reported effects on growth of tax rate variables related to GDP, the ratio of public investment to total investment and the ratio of redistributive transfers to GDP are generally biased downwards. Based on these signed biases the paper discusses some empirical results that seem puzzling from a theoretical viewpoint.

Date: 2002-08-29
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Related works:
Journal Article: Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics (2010)
Working Paper: Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2002:157

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