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The Africa-Dummy in Growth Regressions

Author

Listed:
  • Max Köhler

    (Georg-August-University Göttingen)

  • Stefan Sperlich

    (Université de Genéve)

  • Julian Vortmeyer

    (Georg-August-University Göttingen)

Abstract

The Africa-Dummy has been identfi ed and diff erent explanations for its appearance have been published. In this paper, the issue of the empirical identifcation of the Africa-Dummy is addressed. We introduce a fixed eff ects regression model to identify the Africa-Dummy in one regression step so that its correlations to other coeffcients can be estimated. A semiparametric extension of this model checks whether the Africa-Dummy is a result of misspecifi cation of the functional structure. Furthermore, we show that sub-Saharan African countries have a positive return to the population growth and when adding interaction e ffects, the Africa-Dummy is even positive. Moreover, we show that the Africa-Dummy changes dramatically over time and the punishment for sub-Saharan African countries decreases incrementally since the mid-nineties. According to the Augmented Solow Growth model, it was even insignificant since the end-nineties.

Suggested Citation

  • Max Köhler & Stefan Sperlich & Julian Vortmeyer, 2011. "The Africa-Dummy in Growth Regressions," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 94, Courant Research Centre PEG.
    • Handle: RePEc:got:gotcrc:094
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    File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_94.pdf
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