Abstract

http://ssrn.com/abstract=1762697
 
 

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Robust Growth Determinants


Gernot Doppelhofer


Norwegian School of Economics (NHH) - Department of Economics

Melvyn Weeks


University of Cambridge - Faculty of Economics and Politics

February 7, 2011

NHH Dept. of Economics Discussion Paper No. 3/2011

Abstract:     
This paper investigates the robustness of determinants of economic growth in the presence of model uncertainty, parameter heterogeneity and outliers. The robust model averaging approach introduced in the paper uses a flexible and parsimonious mixture modeling that allows for fat-tailed errors compared to the normal benchmark case. Applying robust model averaging to growth determinants, the paper finds that eight out of eighteen variables found to be significantly related to economic growth by Sala-i-Martin et al. (2004) are sensitive to deviations from benchmark model averaging. For example, the GDP shares of mining or government consumption, are no longer robust or economically significant once deviations from the normal benchmark assumptions are allowed. The paper identifies outlying observations - most notably Botswana - in explaining economic growth in a cross-section of countries.

Number of Pages in PDF File: 42

Keywords: Determinants of Economic Growth, Robust Model Averaging, Heteroscedasticity, Outliers, Mixture Models

JEL Classification: C11, C21, C52, O20, O47, O50

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Date posted: February 18, 2011  

Suggested Citation

Doppelhofer, Gernot and Weeks, Melvyn, Robust Growth Determinants (February 7, 2011). NHH Dept. of Economics Discussion Paper No. 3/2011. Available at SSRN: http://ssrn.com/abstract=1762697 or http://dx.doi.org/10.2139/ssrn.1762697

Contact Information

Gernot Doppelhofer (Contact Author)
Norwegian School of Economics (NHH) - Department of Economics ( email )
Helleveien 30
N-5035 Bergen
Norway

Melvyn Weeks
University of Cambridge - Faculty of Economics and Politics ( email )
Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
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