A rise by any other name? Sensitivity of growth regressions to data source

Hanousek, Jan; Hajkova, Dana; Filer, Randall K.

doi:10.1016/j.jmacro.2007.08.015

Cited by 27 publications

(19 citation statements)

References 21 publications

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“…We also tried alternative measures of growth-rate changes, including the difference between the average growth rate in the first five years and in the last five years; trend growth using IMF data in national currencies; and IMF national currency data for the period 1975-2004. Using IMF national currency data is consistent with Hanousek, Hajkova, and Filer (2008) who argue that the price and exchange-rate adjustments in the basic Penn World Tables data give biased estimates of growth rates. In all of these options, the estimates of the impact of changes in test scores remain statistically significant and quantitatively very similar across alternatives and compared to the estimates reported in Table 6.…”

Section: Skill Improvement and Improved Growthsupporting

confidence: 74%

Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation

2012

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. An electronic version of the paper may be downloaded Terms of use: Documents in EconStor may• from the SSRN website:www. SSRN.com • from the RePEc website:www.RePEc.org• from the CESifo website:T www. CESifo-group.org/wpT CESifo Working Paper No. 2524 Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation AbstractWe provide evidence that the robust association between cognitive skills and economic growth reflects a causal effect of cognitive skills and supports the economic benefits of effective school policy. We develop a new common metric that allows tracking student achievement across countries, over time, and along the within-country distribution. Extensive sensitivity analyses of cross-country growth regressions generate remarkably stable results across specifications, time periods, and country samples. In addressing causality, we find, first, significant growth effects of cognitive skills when instrumented by institutional features of school systems. Second, home-country cognitive-skill levels strongly affect the earnings of immigrants on the U.S. labor market in a difference-in-differences model that compares home-educated to U.S.-educated immigrants from the same country of origin. Third, countries that improved their cognitive skills over time experienced relative increases in their growth paths. From a policy perspective, the shares of basic literates and high performers have independent significant effects on growth that are complementary to each other, and the highperformer effect is larger in poorer countries. warranted scepticism about the identification of causal effects remains. We argue that the most significant problem with these analyses has been the valid measurement of skill differences across countries and that, once remedied, a strong case can be made for identification of true causal impacts in more elaborate econometric specifications.As a simple summary observation, world policy attention today focuses on the lagging fortunes of Sub-Saharan Africa and of Latin America. Considerably less attention goes to East Asia, and, if anything, East Asia is proposed as a role model for the lagging regions. Yet to somebody contemplating development policy in the 1960s, none of this would be so obvious.Latin America had average income exceeding that in Sub-Saharan Africa and the Middle East and North Africa regions, and both of these exceeded East Asia (see Appendix Table A1).1 Further, Latin America...

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Section: Skill Improvement and Improved Growthsupporting

confidence: 74%

Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation

2012

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“…Although we consider BMA as the most promising approach to address the issue of model uncertainty, we do not purport that we have a negative 46 Indeed, the sensitivity of empirical findings to choose of data source for income per capita and growth rate is an important, but generally ignored problem in the cross-country growth literature as Hanousek et al (2008) point out. Although, the vast majority of the literature based on the PWT data, Hanousek et al (2008) compare three widely-used data sources, namely IMF's International Finance Statistics (IFS), PWT and WDI, and show that results of several recent studies depend on the used data source for growth rate.…”

Section: Model Uncertainty and Cross-country Growth Regressionsmentioning

confidence: 99%

“…Although, the vast majority of the literature based on the PWT data, Hanousek et al (2008) compare three widely-used data sources, namely IMF's International Finance Statistics (IFS), PWT and WDI, and show that results of several recent studies depend on the used data source for growth rate. According to these authors, using own-country data (like IFS) for growth rate and PPP-adjusted cross-country comparable data (such as PWT or WDI) for income level is a more appropriate strategy while running cross-country growth regressions.…”

Section: Model Uncertainty and Cross-country Growth Regressionsmentioning

confidence: 99%

Cross-Country Growth Empirics and Model Uncertainty: An Overview

Ulaşan

2012

Economics

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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 crosscountry 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.Published as Survey and Overview JEL O41, O47, C21, C23, C52

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“…4 Hanousek et al (2008) and Johnson et al (2009) criticize the use of the Penn World Table for time series cross-country analysis. We acknowledge this criticism and use the economic growth variable provided by the World Development Indicators of the World Bank for robustness (see column 5 of table 6).…”

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confidence: 99%

No Country for Old Men: Aging Dictators and Economic Growth

Jong‐A‐Pin

Mierau

2011

SSRN Journal

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This paper develops a model of the relationship between the age of a dictator and economic growth. In the model a dictator must spread the resources of the economy over his reign but faces mortality and political risk. The model shows that if the time horizon of the dictator decreases, either due to an increase of mortality risk or political risk, the economic growth rate decreases. The model predictions are supported by empirical evidence based on a three-way fixed effects model including country, year and dictator fixed effects for a sample dictators from 116 countries. These results are robust to sample selection, the tenure dictators, the definition of dictatorship, and a broad set of economic growth determinants. Abstract.This paper develops a model of the relationship between the age of a dictator and economic growth. In the model a dictator must spread the resources of the economy over his reign but faces mortality and political risk. The model shows that if the time horizon of the dictator decreases, either due to an increase of mortality risk or political risk, the economic growth rate decreases. The model predictions are supported by empirical evidence based on a threeway fixed effects model including country, year and dictator fixed effects for a sample of dictators from 116 countries. These results are robust to sample selection, the tenure of dictators, the definition of dictatorship, and a broad set of economic growth determinants.

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A rise by any other name? Sensitivity of growth regressions to data source

Cited by 27 publications

References 21 publications

Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation

Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation

Cross-Country Growth Empirics and Model Uncertainty: An Overview

No Country for Old Men: Aging Dictators and Economic Growth

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