DP10590 Growth Econometrics for Agnostics and True Believers

Author(s): James Rockey, Jonathan Temple
Publication Date: May 2015
Keyword(s): Bayesian model averaging, growth econometrics, growth regressions
JEL(s): C51, O40, O47
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10590

The issue of model uncertainty is central to the empirical study of economic growth. Many recent papers use Bayesian Model Averaging to address model uncertainty, but Ciccone and Jarocinski (2010) have questioned the approach on theoretical and empirical grounds. They argue that a standard 'agnostic' approach is too sensitive to small changes in the dependent variable, such as those associated with different vintages of the Penn World Table (PWT). This paper revisits their theoretical arguments and empirical illustration, drawing on more recent vintages of the PWT, and introducing an approach that limits the degree of agnosticism.