Do all countries follow the same growth process?

Lewis Davis, Ann Owen and Julio Videras

MPRA Paper from University Library of Munich, Germany

Abstract: We estimate a finite mixture model in which countries are sorted into groups based on the similarity of the conditional distributions of their growth rates. We strongly reject the hypothesis that all countries follow a common growth process in favor of a model in which there are two classes of countries, each with its own distinct growth process. Group membership does not conform to the usual categories used to control for parameter heterogeneity such as region or income. However, we find strong evidence that one country characteristic that helps to sort countries into different regimes is the quality of institutions, specifically, the degree of law and order. Once institutional features of the economy are controlled for, we find no evidence that geographic characteristics play a role in determining the country groupings.

Keywords: finite mixture models; multiple equilibria; institutional quality (search for similar items in EconPapers)
JEL-codes: O11 O17 (search for similar items in EconPapers)
Date: 2007-11, Revised 2008-09
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Do all countries follow the same growth process? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:11589

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