Weak Instruments in Growth Regressions : Implications for Recent Cross-Country Evidence on Inequality and Growth

Autor:	Kraay, Aart
Jazyk:	angličtina
Rok vydání:	2015
Předmět:	POINT ESTIMATE CROSS‐ COUNTRY GROWTH RATES POINT ESTIMATES ECONOMIC GROWTH LONG‐RUN LAGGED INEQUALITY INEQUALITY MEASURES LAGGED CHANGES DEPENDENT VARIABLE POLICY MAKERS ERROR TERM COUNTRY‐SPECIFIC CROSS‐COUNTRY DATA INCOME MACROECONOMICS ERROR TERMS DATA SET EXPLANATORY VARIABLES DYNAMIC PANEL GROWTH REGRESSIONS NEGATIVE GROWTH COUNTRY REGRESSIONS ABSOLUTE VALUE PER CAPITA INCOME DEVELOPMENT RESEARCH GROWTH SIGNIFICANT EFFECT GINI COEFFICIENT NEGATIVE RELATIONSHIP CROSS‐COUNTRY EVIDENCE EXPLANATORY POWER POLICY DISCUSSIONS DEVELOPMENT ECONOMICS ESTIMATED COEFFICIENT ECONOMIC INEQUALITY ECONOMICS LETTERS SIGNIFICANCE LEVEL SIGNIFICANT NEGATIVE TRANSFERS GROWTH EMPIRICS EMPIRICAL STUDIES INEQUALITY VARIABLES INCOME INEQUALITY POSITIVE RELATIONSHIP CONSUMPTION INSTRUMENTS DEVELOPMENT POLICY LOG INCOME GROWTH LITERATURE POLICY IMPLICATIONS INCOME COEFFICIENT ECONOMIC STUDIES POLITICAL ECONOMY CHANNEL ANNUAL GROWTH INEQUALITY POLICY CIRCLES EMPIRICAL EVIDENCE ECONOMIC DEVELOPMENT CROSS‐COUNTRY LAGGED LEVELS PRODUCT ECONOMIC REVIEW PANEL DATA SETS GDP GROWTH SPECIFICATION GROSS INCOME ESTIMATED COEFFICIENTS ENDOGENOUS VARIABLES POLITICAL ECONOMY INCOME DISTRIBUTION INCOME SHARES LAGGED VALUES STANDARD DEVIATION ECONOMETRICS POLICIES REGRESSION SAMPLE GROWTH EFFECT POSITIVE EFFECT LAGGED GROWTH EMPIRICAL GROWTH LITERATURE DATA SETS ECONOMETRIC MODELS HUMAN CAPITAL INCREASE GROWTH EMPIRICAL LITERATURE NEGATIVE IMPACT POLICY RESEARCH DEVELOPING COUNTRIES EMPIRICAL RESULTS AVERAGE ANNUAL GROWTH REGRESSION SENSITIVITY ANALYSIS COUNTRY DATA SIGNIFICANT RELATIONSHIP NEGATIVE EFFECT REDISTRIBUTIVE POLICIES ECONOMICS EMPLOYMENT EQUATIONS INEQUALITY DATA PUBLIC GOODS CAPITA INCOME REDISTRIBUTIVE EFFECTS INEQUALITY MEASURE CROSS‐ COUNTRY DATA ECONOMIC RESEARCH POSITIVE GROWTH
Popis:	This paper revisits four recent cross-country empirical studies on the effects of inequality on growth. All four studies report strongly significant negative effects, using the popular system generalized method of moments estimator that is frequently used in cross-country growth empirics. This paper shows that the internal instruments relied on by this estimator in these inequality-and-growth regressions are weak, and that weak instrument-consistent confidence sets for the effect of inequality on growth include a wide range of positive and negative values. This suggests that strong conclusions about the effect of inequality on growth— in either direction—cannot be drawn from these studies. This paper also systematically explores a wide range of alternative sets of internal instruments, and finds that problems of weak instruments are pervasive across these alternatives. More generally, the paper illustrates the importance of documenting instrument strength, basing inferences on procedures that are robust to weak instruments, and considering alternative instrument sets when using the system generalized method of moments estimator for cross-country growth empirics.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=od______2456::cc197ef0d2fc27fbd4896b0e083362a4 https://hdl.handle.net/10986/23456 Zobrazit plný text záznamu