Table 8: Dependent variable: growth rate of per capita GDP. Regressors: volatility of GDP growth, consumption growth, investment growth, government consumption growth, and control variables. Sample: OECD countries (21 countries). Horizon: 1978–2007. Annual observations. All regressions include year dummies.

Static models estimations—restricted sample
Estimation FE FE FE FE-IV GMM FE-IV GMM FE-IV GMM

GDP volatility −0.806 0.038 −0.583** −0.214
(−0.41) (0.15) (−2.24) (−0.66)
Consumption volatility −0.941***−0.953***−0.881***−0.816***
(−4.63) (−4.56) (−4.07) (−3.48)
Investment volatility 0.105** 0.096* −0.025 0.016
(2.37) (1.74) (−0.41) (0.22)
Government consumption volatility 0.293*** 0.291*** 0.268* 0.285*
(2.68) (2.65) (1.65) (1.75)
Education 0.005 0.005 0.005 0.006 0.004 0.005
(1.27) (1.23) (1.24) (0.69) (0.58) (0.62)
Population growth −0.497 −0.331 −0.335 0.761 0.922 0.920
(−1.14) (−0.86) (−0.87) (1.14) (1.49) (1.50)
Initial GDP −0.066***−0.054***−0.054***−0.077*** −0.065*** −0.065***
(−3.32) (−2.85) (−2.84) (−3.51) (−3.18) (−3.22)
Investment share of GDP 0.056*** 0.062*** 0.062***−0.089*** −0.080***−0.079***
(4.79) (5.82) (5.82) (−3.95) (−3.00) (−2.99)
Observations 630 630 630 567 567 567
Instruments no no no yes yes yes
Hansen statistic ( value) 0.118 0.234 0.258
Kleibergen-Paap Wald statistic 90.809 89.438 90.061

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