TU Darmstadt / ULB / TUbiblio

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

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

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.

Item Type: Report
Erschienen: 2004
Creators: Rehme, Günther
Title: Why Run a Million Regressions? Endogenous Policy and Cross Country Growth
Language: English
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.

Series Name: Darmstadt Discussion Papers in Economics
Volume: 140
Place of Publication: Darmstadt
Uncontrolled Keywords: Growth, Public Policy, Cross-Sectional Models
Divisions: 01 Department of Law and Economics
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete > Economic Theory
Date Deposited: 20 Nov 2008 08:17
Additional Information:

JEL - Classification: O4, C2

Export:

Optionen (nur für Redakteure)

View Item View Item