Growth Empirics and Reality

This article questions current empirical practice in the study of growth. It argues that much of the modern empirical growth literature is based on assumptions about regressors, residuals, and parameters that are implausible from the perspective of...

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Bibliographic Details
Main Authors:	Brock, William A., Durlauf, Steven N.
Format:	Journal Article
Language:	English en_US
Published:	Washington, DC: World Bank 2014
Subjects:	AUTOREGRESSIVE MOVING AVERAGE AVERAGE PROCESS BAYES FACTOR BAYESIAN STATISTICS BENCHMARK BOOTSTRAP BUSINESS CYCLE CALCULATION CIVIL LIBERTIES COMPUTATION COUNTRY DATA COUNTRY REGRESSIONS COVARIANCE CROSS-COUNTRY DATA CROSS-COUNTRY DIFFERENCES CROSS-COUNTRY REGRESSION DATA ANALYSIS DATA SET DATA SETS DECISION MAKING DECISION THEORY DEMOCRATIC INSTITUTIONS DETERMINANTS OF GROWTH DISTRIBUTION FUNCTION DISTRIBUTIONAL DYNAMICS ECONOMETRIC ANALYSIS ECONOMETRIC ISSUES ECONOMETRICS ECONOMIC GROWTH ECONOMIC HISTORY ECONOMIC REVIEW ECONOMIC STRUCTURE ECONOMIC SYSTEMS ECONOMIC THEORY ECONOMICS ECONOMICS LITERATURE EMPIRICAL ANALYSIS EMPIRICAL GROWTH LITERATURE EMPIRICAL GROWTH REGRESSIONS EMPIRICAL LITERATURE EMPIRICAL METHODS EMPIRICAL RESEARCH EMPIRICAL WORK ENDOGENOUS GROWTH EQUATIONS ERROR TERM EXOGENOUS VARIABLES EXPECTED UTILITY EXPECTED VALUE EXPECTED VALUES EXPERIMENTAL ECONOMICS FIXED EFFECTS FREE MARKETS FUNCTIONAL FORM GOODNESS OF FIT GROWTH ANALYSIS GROWTH CONTEXT GROWTH DATA GROWTH DETERMINANTS GROWTH DYNAMICS GROWTH EMPIRICS GROWTH EQUATION GROWTH MODEL GROWTH MODELS GROWTH PERFORMANCE GROWTH POLICIES GROWTH PROCESS GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS GROWTH RESIDUALS GROWTH THEORY HETEROSKEDASTICITY HUMAN CAPITAL HYPOTHESES INDIVIDUAL COUNTRIES INEQUALITY INSTRUMENTAL VARIABLES LINEAR MODEL LINEAR MODELS LINEAR REGRESSION LONG RUN MACROECONOMIC POLICY MACROECONOMICS MATRIX MAXIMUM LIKELIHOOD ESTIMATION MEASUREMENT ERROR MICROECONOMIC DATA SETS MILITARY EXPENDITURES MINIMIZATION MISSING OBSERVATIONS MODEL OF GROWTH NEW GROWTH THEORIES ORTHOGONALITY OUTLIERS PER CAPITA GROWTH PER CAPITA INCOME POLICY ANALYSIS POLICY CHANGE POLICY INSTRUMENT POLICY INTERVENTION POLICY VARIABLES POLITICAL INSTABILITY POLITICAL RIGHTS POLITICAL STABILITY POLITICAL SYSTEMS POOR COUNTRIES POOR DATA POOR MEASURES POPULATION GROWTH POVERTY TRAPS PREDICTION PREDICTIONS PROBABILITIES PROBABILITY PROBABILITY THEORY PRODUCTION FUNCTION PROPERTY RIGHTS RANDOM VARIABLES REGRESSION ANALYSES RISK AVERSION SOCIAL CAPITAL STANDARD DEVIATION STANDARD ERRORS STATISTICAL ANALYSES STATISTICAL ANALYSIS STATISTICAL INFERENCE STATISTICAL METHODS STATISTICAL MODELS STATISTICAL SIGNIFICANCE STATISTICAL THEORY STATISTICIANS THEOREMS TRADE OPENNESS TRADE POLICY UTILITY FUNCTION UTILITY FUNCTIONS UTILITY THEORY UTILITY VALUE VALIDITY
Online Access:	http://documents.worldbank.org/curated/en/2001/05/17737425/growth-empirics-reality http://hdl.handle.net/10986/17447

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Summary:	This article questions current empirical practice in the study of growth. It argues that much of the modern empirical growth literature is based on assumptions about regressors, residuals, and parameters that are implausible from the perspective of both economic theory and the historical experiences of the countries under study. Many of these problems, it argues, are forms of violations of an exchangeability assumption that implicitly underlies standard growth exercises. The article shows that these implausible assumptions can be relaxed by allowing for uncertainty in model specification. Model uncertainty consists of two types: theory uncertainty, which relates to which growth determinants should be included in a model; and heterogeneity uncertainty, which relates to which observations in a data set constitute draw from the same statistical model. The article proposes ways to account for both theory and heterogeneity uncertainty. Finally, using an explicit decision-theoretic framework, the authors describe how one can engage in policy-relevant empirical analysis.

Growth Empirics and Reality

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