Robust Growth Determinants

42 Pages Posted: 18 Feb 2011  

Gernot Doppelhofer

Norwegian School of Economics (NHH) - Department of Economics

Melvyn Weeks

University of Cambridge - Faculty of Economics and Politics

Multiple version iconThere are 2 versions of this paper

Date Written: February 7, 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.

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

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

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: https://ssrn.com/abstract=1762697 or http://dx.doi.org/10.2139/ssrn.1762697

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

Paper statistics

Downloads
62
Rank
122,126
Abstract Views
481