Nonlinearities in Cross-Country Growth Regressions: A Bayesian Averaging of Thresholds (BAT) Approach

Jesus Crespo Cuaresma and Gernot Doppelhofer ()
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Gernot Doppelhofer: https://econ.univie.ac.at

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: We propose a framework for assessing the existence and quantifying the effect of threshold effects in cross-country growth regressions in the presence of model uncertainty. The method is based on Bayesian model averaging techniques and generalizes the Bayesian Averaging of Classical Estimates (BACE) method put forward by Sala-i-Martin, Doppelhofer, and Miller (2004). We apply the method presented in this paper to a set of 21 variables that have been found to be robustly related to economic growth in a cross-section of 88 countries We find no evidence of robust threshold effects generated by the initial level of GDP per capita. However, we find that the proportion of years a country has been open to trade is an important source of nonlinear effects on economic growth.

JEL-codes: C11 C15 O20 O50 (search for similar items in EconPapers)
Date: 2006-09
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Journal Article: Nonlinearities in cross-country growth regressions: A Bayesian Averaging of Thresholds (BAT) approach (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:vie:viennp:vie0608

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