Discussion paper

DP6544 Determinants of Economic Growth: Will Data Tell?

Many factors inhibiting and facilitating economic growth have been suggested. Will international income data tell which matter when all are treated symmetrically a priori? We find that growth determinants emerging from agnostic Bayesian model averaging and classical model selection procedures are sensitive to income differences across datasets. For example, many of the 1975-1996 growth determinants according to World Bank income data turn out to be irrelevant when using Penn World Table data instead (the WB adjusts for purchasing power using a slightly different methodology). And each revision of the 1960-1996 PWT income data brings substantial changes regarding growth determinants. We show that research based on stronger priors about potential growth determinants is more robust to imperfect international income data.

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Citation

Ciccone, A and M Jarocinski (2007), ‘DP6544 Determinants of Economic Growth: Will Data Tell?‘, CEPR Discussion Paper No. 6544. CEPR Press, Paris & London. https://cepr.org/publications/dp6544