Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics

Günther Rehme

Journal of Institutional and Theoretical Economics (JITE), 2010, vol. 166, issue 4, 735-759

Abstract: This paper analyzes the link between long-run economic growth and policy that depends on important economic fundamentals. In simple growth regressions the measured policy effects would then generally be biased. Using a widely quoted theoretical model, the signs of the biases are derived. It is shown that the usually reported effects on growth of tax-rate variables related to GDP - the ratio of public to total investment and that of redistributive transfers to GDP - would generally be biased downwards. The signed biases provide a theory-based lens through which some empirical, yet theoretically puzzling, results can be viewed and subsequently discussed.

JEL-codes: C2 D3 O4 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics (2010)
Working Paper: Why Run a Million Regressions? Endogenous Policy and Cross-Country Growth Empirics (2002)
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