Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86798
Authors: 
Salimans, Tim
Year of Publication: 
2011
Series/Report no.: 
Tinbergen Institute Discussion Paper 11-012/4
Abstract: 
Regression analyses of cross-country economic growth data are complicated by two main forms of model uncertainty: the uncertainty in selecting explanatory variables and the uncertainty in specifying the functional form of the regression function. Most discussions in the literature address these problems independently, yet a joint treatment is essential. We perform this joint treatment by extending the linear model to allow for multiple-regime parameter heterogeneity of the type suggested by new growth theory, while addressing the variable selection problem by means of Bayesian model averaging. Controlling for variable selection uncertainty, we confirm the evidence in favor of new growth theory presented in several earlier studies. However, controlling for functional form uncertainty, we find that the effects of many of the explanatory variables identified in the literature are not robust across countries and variable selections.
Subjects: 
growth regression
variable selection
model uncertainty
model averaging
semi-parametric Bayes
MCMC
JEL: 
C11
C14
C15
O40
O57
Document Type: 
Working Paper

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