Nonlinearities and Robustness in Growth Regressions

26 Pages Posted: 9 Oct 2005

See all articles by Jenny Minier

Jenny Minier

University of Kentucky - Department of Economics

Date Written: September 2005

Abstract

Cross-country regressions are a well-established means of attempting to uncover the empirical determinants of economic growth. However, in an influential paper, Levine and Renelt (1992) demonstrate that the results of these studies are very sensitive to the choice of conditioning variables. Using a variant of Leamer's (1983) extreme bounds test, they show that almost no explanatory variables are robustly correlated with growth. In this paper, I show that this extremely pessimistic conclusion is partly due to the ad hoc assumption of linearity in the traditional growth specification. Specifically, under alternative (nonlinear) specifications, the number of robust variables increases substantially.

Keywords: Nonlinearities, growth regressions, fiscal policy

JEL Classification: O4, E62

Suggested Citation

Minier, Jenny, Nonlinearities and Robustness in Growth Regressions (September 2005). Available at SSRN: https://ssrn.com/abstract=813132 or http://dx.doi.org/10.2139/ssrn.813132

Jenny Minier (Contact Author)

University of Kentucky - Department of Economics ( email )

335 Business and Economics Building
Lexington, KY 40506
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
211
rank
135,865
Abstract Views
1,055
PlumX Metrics