Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach
AbstractThis paper examines the robustness of explanatory variables in cross-country economic growth regressions. It introduces and employs a novel approach, Bayesian Averaging of Classical Estimates (BACE), which constructs estimates by averaging OLS coefficients across models. The weights given to individual regressions have a Bayesian justification similar to the Schwarz model selection criterion. Of 67 explanatory variables we find 18 to be significantly and robustly partially correlated with long-term growth and another three variables to be marginally related. The strongest evidence is for the relative price of investment, primary school enrollment, and the initial level of real GDP per capita.
CitationSala-I-Martin, Xavier, Gernot Doppelhofer, and Ronald I. Miller. 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach." American Economic Review, 94 (4): 813-835. DOI: 10.1257/0002828042002570
- C51 Model Construction and Estimation
- C52 Model Evaluation, Validation, and Selection
- O47 Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence