Sharp Instrument: A Stab at Identifying the Causes of Economic Growth
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Summary:
We shed new light on the determinants of growth by tackling the blunt and weak instrument problems in the empirical growth literature. As an instrument for each endogenous variable, we propose average values of the same variable in neighboring countries. This method has the advantage of producing variable-specific and time-varying—namely, “sharp”—and strong instruments. We find that export sophistication is the only robust determinant of growth among standard growth determinants such as human capital, trade, financial development, and institutions. Our results suggest that other growth determinants may be important to the extent they help improve export sophistication.
Series:
Working Paper No. 2018/117
Subject:
Econometric analysis Economic sectors Education Estimation techniques Exports International trade Manufacturing National accounts Real exports
English
Publication Date:
May 21, 2018
ISBN/ISSN:
9781484357170/1018-5941
Stock No:
WPIEA2018117
Pages:
24
Please address any questions about this title to publications@imf.org