We have just averaged over two trillion cross-country growth regressions
Eduardo Ley and
Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh
We investigate the issue of model uncertainty in cross-country growth regressions using Bayesian model averaging (BMA). We find that the posterior probability is distributed among many models, suggesting the superiority of BMA over any single model. Out-of-sample predictive results support that claim. In contrast with Levine and Renelt (1992), our results broadly support the more "optimistic'' conclusion of Sala-i-Martin (1997b), namely, that some variables are important regressors for explaining cross-country growth patterns. However, the variables we identify as most useful for growth regression differ substantially from Sala-i-Martin's results.
Keywords: Bayesian model averaging; choice of regressors; economic growth; Markov chain; Monte Carlo prediction (search for similar items in EconPapers)
JEL-codes: C11 C52 O49 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:43
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