Determinants of economic growth: A varying-coefficient path identification approach

Qiuqin He and Bing Xu

Journal of Business Research, 2019, vol. 101, issue C, 811-818

Abstract: Identifying the determinants of economic growth is an important issue for policy-decision making. However, the disparities in the conclusions of cross-country growth empirics confuse policymakers. This paper focuses on the divergence of determinants of cross-country growth in Varian (2014) and provides an alternative explanation for the divergence by proposing a novel varying coefficient path identification approach with non-parametric techniques. With this approach, we verify the importance of four variables—Initial Income, Life expectancy, Fraction of Confucian, and Equipment Investment, which is consistent with Varian (2014). Meanwhile, we interpret that the divergence of determinants mentioned in Varian (2014) is mainly due to the neglect of the potential non-linearities and cross-country heterogeneity in the growth process. Finally, new features of growth during 1960–2016 are investigated, and the determinants, apart from Initial Income, remain fairly consistent with those during 1960–1992. These conclusions are further confirmed by the convergence test and robustness test.

Keywords: Determinants; Cross-country growth regression; Non-linearities; Cross-country heterogeneity; Varying coefficient path identification approach (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:101:y:2019:i:c:p:811-818

DOI: 10.1016/j.jbusres.2018.12.013

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