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Abstract:
We survey the recent literature on growth empirics in this paper. Modern growth economics has led to a rich and wide-ranging empirical literature replete with many new methodologies and many new findings. Yet in comparing the modern empirical literature to the traditional growth accounting analyses of the 1960's and 1970's, one cannot help but be struck by the relative lack of progress on substantive conclusions. The critical role of TFP found in recent work is consistent with claims as far back as Solow. Evidence of statistical notions of convergence represents a new set of stylized facts but suffers from a lack of connection to economically interesting notions of convergence. The search for empirically successful growth models has provided a range of candidate growth determinants that lie far outside the domain of the neoclassical growth model, but efforts to search for robust determinants have had mixed results, outside of the finding that physical capital accumulation affects growth, which is no surprise given the earlier literature. Evidence of nonlinearities and parameter heterogeneity is suggestive of multiple steady states and richer growth dynamics than neoclassical theories, but this evidence has yet to be integrated into a consistent whole. Together, this suggests that the next step in empirical growth research should be the unification of the vast array of statistical claims into a unified growth picture combined with efforts to link this picture more tightly with growth theories.

Growth empirics, Economic growth, Development

Abstract:
Do institutions rule when explaining cross-country divergence? By employing regression tree analysis to uncover the existence and nature of multiple development clubs and growth regimes, this paper finds that to a large extent they do. However, the role of ethnic fractionalization cannot be dismissed. The findings suggest that sufficiently high-quality institutions may be necessary for the negative impact on development from high levels of ethnic fractionalization to be mitigated. Interestingly, I find no role for geographic factors; neither those associated with climate nor physical isolation, in explaining divergence. There is also no evidence to suggest a role for religious fractionalization.

Data mining, regression trees, institutions, geography, fractionalization, economic growth, Africa

Abstract:
This article investigates the strength of empirical evidence for various growth theories when there is model uncertainty with respect to the correct growth model. Using model averaging methods, we find little evidence that so-called fundamental growth theories play an important role in explaining aggregate growth. In contrast, we find strong evidence for macroeconomic policy effects and a role for unexplained regional heterogeneity, as well as some evidence of parameter heterogeneity in the aggregate production function. We conclude that the ability of cross-country growth regressions to adjudicate the relative importance of alternative growth theories is limited.

Abstract:
This paper investigates the strength of empirical evidence for various growth theories when there is model uncertainty with respect to the correct growth model. Using model averaging methods, we find little evidence that so-called fundamental growth theories play an important role in explaining aggregate growth. In contrast, we find strong evidence for macroeconomic policy effects and a role for unexplained regional heterogeneity, as well as some evidence of parameter heterogeneity in the aggregate production function. We conclude that the ability of cross-country growth regressions to adjudicate the relative importance of alternative growth theories is limited.

Economic growth, Total Factor Productivity, Model Uncertainty

Abstract:
In this paper, we investigate the relationship between foreign aid and growth using recently developed sample splitting methods that allow us to uncover evidence for the existence of heterogeneity and nonlinearity simultaneously. We also implement a new methodology that allows us to deal with model uncertainty in the context of these methods. We find some evidence that aid may have heterogeneous effects on growth across two growth regimes defined by ethnic fractionalization. In particular, countries that belong to a growth regime characterized by levels of ethnic fractionalization above a threshold value experience a negative partial relationship between aid and growth, while those in the regime with ethnic fractionalization below the threshold experience no growth effects from aid at all. Nevertheless, there exists substantial model uncertainty so that attempts to pin down the typology of these growth regimes as being decisively characterized by ethnic fractionalization remain inconclusive. When we account for model uncertainty, we find no evidence to suggest that the relationship between aid and growth is nonlinear. Overall, our results suggest that the partial effect of aid on growth is very likely to be negative although we cannot reject the hypothesis that aid has no effect on growth. In this sense, our findings suggest that aid is potentially counterproductive to growth with outcomes not meeting the expectations of donors.

Economic Growth, Aid, Threshold Regression, Regression Trees, Bayesian model averaging

Abstract:
Barro and McCleary (2003) is a key research contribution in the new literature exploring the macroeconomic effects of religious beliefs. This paper represents an effort to evaluate the strength of their claims. We evaluate their results in terms of replicability and robustness. While we find that their analysis meets the standard of statistical replicability, we do not find that the results are robust to changes in their baseline statistical specification. Taken together, we conclude that their analysis cannot be taken to provide useable evidence on how religion might affect aggregate outcomes.

Economic growth, Religion, Model Uncertainty

Abstract:
Recent research suggests that income redistribution preferences vary across identity groups. We employ statistical learning methods which emphasize pattern recognition, classification and regression trees (CARTTM) and random forests (RandomForestsTM), to uncover what these groups are. Using data from the General Social Survey, we find that, out of a large set of identity markers, only race, gender, age, and socioeconomic class are important classifiers for income redistribution preferences. Further, the uncovered identity groupings are characterized by complex patterns of interaction amongst these salient classifiers. We explore the extent to which existing theories of income redistribution can explain our results, but conclude that current approaches do not fully explain the findings.

Data mining, classification and regression trees, redistribution preferences, welfare, identity

Abstract:
Nonlinearities in growth have important implications for cross-country income inequality. In particular, they imply that countries may spend long periods of time in a low-growth poverty trap. However, finding evidence of such nonlinearities in the data and accounting for their emergence pose unique challenges to researchers.

balanced growth, diffusion of technology, economic growth, endogenous growth, growth take-offs, structural change

Abstract:
This paper extends the simple threshold regression framework of Hansen (2000) and Caner and Hansen (2004) to allow for endogeneity of the threshold variable. We develop a concentrated least squares estimator of the threshold parameter based on an inverse Mills ratio bias correction. We show that our estimator is consistent and investigate its performance using a Monte Carlo simulation that indicates the applicability of the method in …finite samples.

Threshold regression, nonlinear regression, instrumental variables

Abstract:
We uncover evidence of substantial heterogeneity in the growth experience of countries using a structural threshold regression methodology. Our findings suggest that studies that seek to promote mono-causal explanations in the institutions versus geography debate in growth are potentially misleading.

Threshold Regression, Endogenous Threshold Variables, Growth, Institutions, Geography