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Why Run a Million Regressions? Endogenous Policy and Cross Country Growth

Rehme, Günther :
Why Run a Million Regressions? Endogenous Policy and Cross Country Growth.
In: Darmstadt Discussion Papers in Economics , 140 . Darmstadt
[Report], (2004)

Kurzbeschreibung (Abstract)

This paper analyzes the link between growth and public policy when the latter depends on economically important fundamentals. When policy is endogenous the measured effects of policy on growth will generally be biased. Using a widely quoted theoretical model, the signs of the biases are derived. It is shown that the usually reported effects on growth of tax rate variables related to GDP, the ratio of public investment to total investment and the ratio of redistributive transfers to GDP are generally biased downwards. Based on these signed biases the paper discusses some empirical results that seem puzzling from a theoretical viewpoint.

Typ des Eintrags: Report
Erschienen: 2004
Autor(en): Rehme, Günther
Titel: Why Run a Million Regressions? Endogenous Policy and Cross Country Growth
Sprache: Englisch
Kurzbeschreibung (Abstract):

This paper analyzes the link between growth and public policy when the latter depends on economically important fundamentals. When policy is endogenous the measured effects of policy on growth will generally be biased. Using a widely quoted theoretical model, the signs of the biases are derived. It is shown that the usually reported effects on growth of tax rate variables related to GDP, the ratio of public investment to total investment and the ratio of redistributive transfers to GDP are generally biased downwards. Based on these signed biases the paper discusses some empirical results that seem puzzling from a theoretical viewpoint.

Reihe: Darmstadt Discussion Papers in Economics
Band: 140
Ort: Darmstadt
Freie Schlagworte: Growth, Public Policy, Cross-Sectional Models
Fachbereich(e)/-gebiet(e): 01 Fachbereich Rechts- und Wirtschaftswissenschaften > Volkswirtschaftliche Fachgebiete > Fachgebiet Wirtschaftstheorie
01 Fachbereich Rechts- und Wirtschaftswissenschaften > Volkswirtschaftliche Fachgebiete
01 Fachbereich Rechts- und Wirtschaftswissenschaften
Hinterlegungsdatum: 20 Nov 2008 08:17
Zusätzliche Informationen:

JEL - Classification: O4, C2

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