Truth and robustness in cross-country growth regressions

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2004-12-01

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Abstract

We re-examine studies of cross-country growth regressions by Levine and Renelt (American Economic Review, Vol. 82, 1992, pp. 942-963) and Sala-i-Martin (American Economic Review, Vol. 87, 1997a, pp. 178-183; Economics Department, Columbia, University, 1997b). In a realistic Monte Carlo experiment, their variants of Edward Leamer's extreme-bounds analysis are compared with a cross-sectional version of the general-to-specific search methodology associated with the LSE approach to econometrics. Levine and Renelt's method has low size and low power, while Sala-i-Martin's method has high size and high power. The general-to-specific methodology is shown to have a near nominal size and high power. Sala-i-Martin's method and the general-to-specific method are then applied to the actual data from Sala-i-Martin's original study.

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https://hdl.handle.net/10161/2079

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Hoover

Kevin Douglas Hoover

Professor of Economics

Professor Hoover's research interests include macroeconomics, monetary economics, the history of economics, and the philosophy and methodology of empirical economics. His recent work in economics has focused on the application of causal search methodologies for structural vector autoregression, the history of microfoundational programs in macroeconomics, and Roy Harrod's early work on dynamic macroeconomics. In philosophy, he has concentrated on issues related to causality, especially in economics, and on reductionism -- the philosophical counterpart to microfoundations. Recent publications include:

  • "Trygve Haavelmo's Experimental Methodology and Scenario Analysis in a Cointegrated Vector Autoregression" (Econometric Theory, 2015), 
  • "Reductionism in Economics:  Intentionality and Eschatological Justification in the Microfoundations of Macroeconomics" (Philosophy of Science 2015), 
  • "Mathematical Economics Comes to America:  Charles S. Peirce’s Engagement with Cournot’s Recherches sur les Principes Mathematiques de la Théorie des Richesses" (Journal of the History of Economic Thought, 2015), 
  • "The Genesis of Samuelson and Solow’s Price-Inflation Phillips Curve" (History of Economics Review, 2015), 
  • "Solow's Harrod: Transforming Cyclical Dynamics into a Model of Long-run Growth" (European Journal of the History of Economic Thought 2015), 
  • "In the Kingdom of Solovia:  The Rise of Growth Economics at MIT, 1956-1970" (History of Political Economy 2014), 
  • “Still Puzzling: Evaluating the Price Puzzle in an Empirically Identified Structural Vector Autoregression” (Empirical Economics, 2014),
  • "On the Reception of Haavelmo's Econometric Thought" (Journal of the History of Economic Thought, 2014) – winner of the History of Economics Society Best Paper Award in 2015.  

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