Mastering Panel Metrics: Causal Impact of Democracy on Growth

Shuowen Chen, Victor Chernozhukov and Ivan Fernandez-Val ()

AEA Papers and Proceedings, 2019, vol. 109, 77-82

Abstract: We revisit the panel data analysis of Acemoglu et al. (forthcoming) on the relationship between democracy and economic growth using state-of-the-art econometric methods. We argue that panel data settings are high-dimensional, resulting in estimators to be biased to a degree that invalidates statistical inference. We remove these biases by using simple analytical and sample-splitting methods, and thereby restore valid statistical inference. We find that debiased fixed effects and Arellano-Bond estimators produce higher estimates of the long-run effect of democracy on growth, providing even stronger support for the key hypothesis of Acemoglu et al.

JEL-codes: C23 C33 D72 O43 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/pandp.20191071
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Citations: View citations in EconPapers (9)

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Working Paper: Mastering Panel 'Metrics: Causal Impact of Democracy on Growth (2019)
Working Paper: Mastering Panel Metrics: Causal Impact of Democracy on Growth (2019)
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