We have just averaged over two trillion cross-country growth regressions
Eduardo Ley and
Mark Steel ()
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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