Mastering Panel 'Metrics: Causal Impact of Democracy on Growth
Victor Chernozhukov and
Papers from arXiv.org
The relationship between democracy and economic growth is of long-standing interest. We revisit the panel data analysis of this relationship by Acemoglu, Naidu, Restrepo and Robinson (forthcoming) using state of the art econometric methods. We argue that this and lots of other panel data settings in economics are in fact high-dimensional, resulting in principal estimators -- the fixed effects (FE) and Arellano-Bond (AB) estimators -- to be biased to the degree that invalidates statistical inference. We can however remove these biases by using simple analytical and sample-splitting methods, and thereby restore valid statistical inference. We find that the debiased FE and AB estimators produce substantially higher estimates of the long-run effect of democracy on growth, providing even stronger support for the key hypothesis in Acemoglu, Naidu, Restrepo and Robinson (forthcoming). Given the ubiquitous nature of panel data, we conclude that the use of debiased panel data estimators should substantially improve the quality of empirical inference in economics.
New Economics Papers: this item is included in nep-ecm, nep-gro and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://arxiv.org/pdf/1901.03821 Latest version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1901.03821
Access Statistics for this paper
More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().