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We Just Averaged over Two Trillion Cross-Country Growth Regressions

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  • Mr. Mark F. J. Steel
  • Mr. Eduardo Ley

Abstract

We investigate the issue of model uncertainty in cross-country growth regressions using Bayesian model averaging (BMA). We find that the posterior probability is distributed among many models, suggesting the superiority of BMA over any single model. Out-of-sample predictive results support that claim. In contrast with Levine and Renelt (1992), our results broadly support the more “optimistic” conclusion of Sala-i-Martin (1997b), namely, that some variables are important regressors for explaining cross-country growth patterns. However, the variables we identify as most useful for growth regression differ substantially from Sala-i-Martin’s results.

Suggested Citation

  • Mr. Mark F. J. Steel & Mr. Eduardo Ley, 1999. "We Just Averaged over Two Trillion Cross-Country Growth Regressions," IMF Working Papers 1999/101, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1999/101
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    Cited by:

    1. Escaith, Hubert & Morley, Samuel, 2001. "El efecto de las reformas estructurales en el crecimiento económico de la América Latina y el Caribe. Una estimación empírica," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(272), pages 469-513, octubre-d.
    2. Straub, Stéphane, 2000. "Empirical Determinants of Good Institutions: Do We Know Anything?," IDB Publications (Working Papers) 6085, Inter-American Development Bank.
    3. Fabrizio Carmignani, 2003. "Political Instability, Uncertainty and Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(1), pages 1-54, February.
    4. Gregory N. Price, 2003. "Economic Growth in a Cross‐section of Nonindustrial Countries: Does Colonial Heritage Matter for Africa?," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 478-495, August.
    5. Stéphane Straub, 2000. "Factores determinantes empíricos de las buenas instituciones: ¿sabemos algo a ciencia cierta?," Research Department Publications 4216, Inter-American Development Bank, Research Department.
    6. Fabrizio Carmignani, 2001. "Theory and Evidence on the Political Economy of Growth," Working Papers 33, University of Milano-Bicocca, Department of Economics, revised Jan 2001.
    7. Christie Smith, 2004. "The long-run effects of monetary policy on output growth," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 67, September.
    8. Operations Evaluation Department, 2004. "2003 Annual Review of Development Effectiveness : The Effectiveness of Bank Support for Policy Reform," World Bank Publications - Books, The World Bank Group, number 14925.
    9. Escaith, Hubert & Morley, Samuel A., 2000. "The impact of structural reforms on growth in Latin America and the Caribbean: an empirical estimation," Macroeconomía del Desarrollo 5331, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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    Keywords

    WP; regression coefficient;

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