DP6288 Growth and relative living standards - testing Barriers to Riches on post-war panel data

Author(s): David Meenagh, Patrick Minford, Jiang Wang
Publication Date: May 2007
Keyword(s): bootstrap testing, business regulation, business taxation, government R&D, growth, living standards, public education, structural model
JEL(s): C52, O41, O57
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6288

The effect of business tax and regulation on growth, together with potential effects of government spending on education and R&D, is embodied in a model of a small open economy with growth choices. The structural model is estimated on post-war panel data for 76 countries and the bootstrap is used to produce the model's sampling variation for the analysis of panel regressions of growth. Statistical rejection can occur at either the structural or the growth regression stage. The models featuring government spending on education and R&D are rejected while that with business taxation is accepted.