Some million thresholds: Nonlinearity and cross-country growth regressions

Jesus Crespo Cuaresma

No 51, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: This paper examines the robustness of the determinants of economic growth in cross-country regressions allowing for nonlinearity in the specification of the data generating process. The nonlinearity is modelled as regime-dependent parameter heterogeneity, where the regime is determined by the level of the explanatory variable whose robustness we aim to measure. Using a generalization of the procedure in Sala-i-Martin (American Economic Review, 1997), strong evidence of nonlinearity is found for practically all of the variables that are robustly correlated to growth in the linear setting, including those variables which are usually included in most cross-county growth regressions.

Keywords: growth regressions; robustness; nonlinearity; threshold models (search for similar items in EconPapers)
JEL-codes: C52 O50 (search for similar items in EconPapers)
Date: 2003-06-04
New Economics Papers: this item is included in nep-cmp, nep-dev and nep-ecm
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