Table 7: Dependent variable: growth rate of per capita GDP. Regressors: lagged growth rate of per capita GDP, volatility of GDP growth, consumption growth, investment growth, government consumption growth, and control variables. Sample: OECD countries (25 countries). Horizon: 1978–2007. All regressions include year dummies.

Dynamic models estimations
Estimation LSDV LSDV LSDV GMM-SYS
GMM-SYS
GMM-SYS
IV 2sls IV 2sls IV 2sls

GDP volatility −0.248 −0.931 −0.053 −0.392
(−1.59) (−1.43) (−0.29) (−0.56)
Consumption volatility −0.769*** −0.396** −0.470** −0.304
(−2.83) (−2.16) (−2.11) (−1.26)
Investment volatility 0.169* 0.341* 0.13 0.195
(1.78) (1.66) (1.66) (0.92)
Government consumption volatility 0.252* 0.372*** 0.330* 0.360**
(1.85) (2.70) (2.05) (2.12)
GDP growth ( ) 0.365*** 0.309*** 0.299*** 0.375*** 0.340*** 0.345***
(4.95) (4.33) (4.02) (4.44) (4.24) (4.33)
Education 0.004 0.003 0.004 0.007 0.008 0.009
(0.66) (0.48) (0.68) (0.66) (0.83) (0.77)
Population growth 0.100 −0.024 0.16 −0.440 −0.534 −0.522
(0.22) (−0.06) (0.33) (−0.92) (−1.08) (−0.98)
Initial GDP −0.048*** −0.021 −0.028** −0.015 −0.013 −0.015
(−3.90) (−1.64) (−2.12) (−0.77) (−0.68) (−0.65)
Investment share of GDP −0.085*** −0.064**−0.060*** −0.075** −0.068** −0.075**
(−3.49) (−3.14) (−3.00) (−2.37) (−2.17) (−2.24)
Observations 675 675 675 725 725 725
Country dummies Yes Yes Yes No No No
Instruments Yes Yes Yes Yes Yes Yes
Kleibergen-Paap Wald statistic 140.47 56.569 23.352
Hansen /Sargan test ( value) 0.715 0.738 0.654 0.243 0.592 0.558
Arellano-Bond test (AR2) 0.837 0.707 0.752

Note: -statistics in parenthesis, robust SEs. *Significance at 10%, **significance at 5%, and ***significance at 1%.