Econometrics for Grumblers: A New Look at the Literature on Cross-Country Growth Empirics

Markus Eberhardt and Francis Teal

No 2009-07, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: Since the seminal contribution of Gregory Mankiw, David Romer and David Weil (1992), the growth empirics literature has used increasingly sophisticated methods to select relevant growth determinants in estimating cross-section growth regressions. The vast majority of empirical approaches however limit cross-country heterogeneity in production technology to the specification of Total Factor Productivity, the ‘measure of our ignorance’ (Abramowitz, 1956). The central theme of this survey is an investigation of this choice of specification against the background of pertinent data properties when the units of observations are countries or regions and the time-series dimension of the data becomes substantial. We present two general empirical frameworks for cross-country productivity analysis and demonstrate that they encompass the approaches in the growth empirics literature of the past two decades. We then develop our central argument, that cross-country heterogeneity in the impact of observables and unobservables on output is important for reliable empirical analysis. This idea is developed against the background of the pertinent time-series and cross-section properties of macro panel data.

Keywords: Cross-Country Empirical Analysis; Nonstationary Panel Econometrics; Parameter Heterogeneity; Common Factor Model; Cross-section Dependence (search for similar items in EconPapers)
JEL-codes: C32 O11 O47 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: ECONOMETRICS FOR GRUMBLERS: A NEW LOOK AT THE LITERATURE ON CROSS‐COUNTRY GROWTH EMPIRICS (2011)
Working Paper: Econometrics for Grumblers: A New Look at the Literature on Cross-Country Growth Empirics (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:2009-07

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