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Some million thresholds: Nonlinearity and cross-country growth regressions

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  • Cuaresma, Jesus Crespo

    (University of Vienna)

Abstract

This paper examines the robustness of the determinants of economic growth in cross-country regressions allowing for nonlinearity in the specification of the data generating process. The nonlinearity is modelled as regime-dependent parameter heterogeneity, where the regime is determined by the level of the explanatory variable whose robustness we aim to measure. Using a generalization of the procedure in Sala-i-Martin (American Economic Review, 1997), strong evidence of nonlinearity is found for practically all of the variables that are robustly correlated to growth in the linear setting, including those variables which are usually included in most cross-county growth regressions.

Suggested Citation

  • Cuaresma, Jesus Crespo, 2003. "Some million thresholds: Nonlinearity and cross-country growth regressions," Royal Economic Society Annual Conference 2003 51, Royal Economic Society.
    • Handle: RePEc:ecj:ac2003:51
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    Cited by:

    1. Balázs Egert & Fredj Jawadi, 2018. "The Nonlinear Relationship between Economic growth and Financial Development," Working Papers hal-04141770, HAL.
    2. Ledenyov, Dimitri O. & Ledenyov, Viktor O., 2013. "Some thoughts on accurate characterization of stock market indexes trends in conditions of nonlinear capital flows during electronic trading at stock exchanges in global capital markets," MPRA Paper 49921, University Library of Munich, Germany.
    3. Bermúdez, Cecilia & Dabús, Carlos & Aromí, Daniel, 2022. "Uncertainty and economic growth: evidence from Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.

    More about this item

    Keywords

    growth regressions; robustness; nonlinearity; threshold models;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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