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Cleaning Up the Kitchen Sink: Growth Empirics When the World Is Not Simple

Francisco Rodríguez ()

No 2006-004, Wesleyan Economics Working Papers from Wesleyan University, Department of Economics

Abstract: This paper explores the relevance of unknown nonlinearities for growth empirics. Recent theoretical contributions and case-study evidence suggest that nonlinearities are pervasive in the growth process. I show that the postwar data provide strong evidence in favor of generalized non-linearities. I provide two alternative mechanisms for making inference about the effects of production-function shifters on growth that do not make a priori assumptions about functional form: monotonicity tests and average derivative estimation. The results of these tests point towards a greater role for structural variables and a smaller role for policy variables than the linear model.

Keywords: Economic Growth; Cross-Country Growth Regressions; Non-linearities; Non-parametric econometrics (search for similar items in EconPapers)
JEL-codes: O40 O47 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006-01, Revised 2007-05-17
New Economics Papers: this item is included in nep-dev
Note: Earlier version "Cleaning Up the Kitchen Sink: On the Consequences of the Linearity Assumption for Cross-Country Growth Empirics" available at http://repec.wesleyan.edu/pdf/frrodriguez/2006004a_rodriguez.pdf
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