Journal Article

No. 2012-16 | May 10, 2012
Cross-Country Growth Empirics and Model Uncertainty: An Overview PDF Icon
(Published as Survey and Overview)

Abstract

The aim of this paper is to provide an overview of empirical cross-country growth literature. The paper begins with describing the basic framework used in recent empirical cross-country growth research. Even though this literature was mainly inspired by endogenous growth theories, the neoclassical growth model is still the workhorse for cross-country growth empirics. The second part of the paper emphasises model uncertainty, which is indeed immense but generally neglected in the empirical cross-country growth literature. The most outstanding feature of the literature is that a large number of factors have been suggested as fundamental growth determinants. Together with the small sample property, this leads to an important problem: model uncertainty. The questions which factors are more fundamental in explaining growth dynamics and hence growth differences are still the subject of academic research. Recent attempts based on general-to-specific modeling or model averaging are promising but have their own limits. Finally, the paper highlights the implications of model uncertainty for policy evaluation.

JEL Classification

C21 C23 C52 O40 O47

Citation

Bülent Ulaşan (2012). Cross-Country Growth Empirics and Model Uncertainty: An Overview. Economics: The Open-Access, Open-Assessment E-Journal, 6 (2012-16): 1—69. http://dx.doi.org/10.5018/economics-ejournal.ja.2012-16

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