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Title:Robust growth determinants PDF Logo
Authors:Doppelhofer, Gernot
Weeks, Melvyn
Issue Date:2011
Series/Report no.:CESifo working paper: Fiscal Policy, Macroeconomics and Growth 3354
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.
Subjects:determinants of economic growth
robust model averaging
heteroscedasticity
outliers
mixture models
JEL:C11
C21
C52
O20
O47
O50
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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