Determinants of Economic Growth: A Bayesian Panel Data Approach
39 Pages Posted: 14 Oct 2010
Date Written: October 13, 2010
Model uncertainty hampers consensus on the key determinants of economic growth. Some recent cross-country cross-sectional analyses have employed Bayesian Model Averaging to tackle the issue of model uncertainty. This paper extends that approach to panel data models with country-specific fixed effects in order to simultaneously address model uncertainty and endogeneity issues. The empirical findings suggest that in a panel setting the most robust growth determinants are the price of investment goods, distance to major world cities, and political rights.
Keywords: Growth determinants, model uncertainty, bayesian model averaging, dynamic panel estimation
JEL Classification: C11, C23, O4
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