Unveiling covariate inclusion structures in economic growth regressions using latent class analysis

Jesus Crespo Cuaresma, Bettina Grün, Paul Hofmarcher (), Stefan Humer and Mathias Moser

European Economic Review, 2016, vol. 81, issue C, 189-202

Abstract: We propose the use of Latent Class Analysis methods to analyze the covariate inclusion patterns across specifications resulting from Bayesian model averaging exercises. Using Dirichlet Process clustering, we are able to identify and describe dependency structures among variables in terms of inclusion in the specifications that compose the model space. We apply the method to two datasets of potential determinants of economic growth. Clustering the posterior covariate inclusion structure of the model space formed by linear regression models reveals interesting patterns of complementarity and substitutability across economic growth determinants.

Keywords: Economic growth determinants; Bayesian model averaging; Latent class analysis; Dirichlet processes (search for similar items in EconPapers)
JEL-codes: C11 C21 O47 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:81:y:2016:i:c:p:189-202

DOI: 10.1016/j.euroecorev.2015.03.009

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