Table 10: 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 (25 countries). Horizon: 1978–2007. Annual observations. All regressions include year dummies. All regressions are population weighted.

Static models weighted estimations

Estimation

FE

FE

FE

FE-IV 2sls

FE-IV 2sls

FE-IV 2sls

GDP volatility

–0.073

0.311

–0.476***

–1.790**

(–0.89)

(1.55)

(–3.94)

(–2.84)

Consumption volatility

–0.687***

–0.766***

–1.337***

–0.882***

(–5.75)

(–5.90)

(–6.79)

(–4.68)

Investment volatility

0.086***

0.116

0.202***

0.625***

(2.83)

(0.21)

(3.08)

(3.11)

Government consumption volatility

0.066

0.036

–0.058

0.136

(0.57)

(0.753)

(–0.34)

(0.73)

Education

0.006

0.007*

0.008**

0.003

0.006

0.006

(1.45)

(1.94)

(2.03)

(0.55)

(0.95)

(0.99)

Population growth

–0.048

–0.203

–0.223

1.332***

1.05**

1.297***

(–0.15)

(–0.65)

(–0.72)

(2.88)

(2.38)

(2.70)

Initial GDP

–0.042***

–0.016**

–0.017**

–0.057***

–0.100

–0.022*

(–5.63)

(–2.21)

(–2.05)

(–5.18)

(–0.81)

(–1.69)

Investment share of GDP

0.115***

0.110***

0.110***

–0.132***

–0.108***

–0.119***

(11.44)

(11.07)

(11.05)

(–5.19)

(–4.44)

(–4.28)

Observations

750

750

750

675

675

675

Instruments

no

no

no

yes

yes

yes

Sargan statistic ( value)

0.807

0.514

0.852

Kleibergen-Paap Wald statistic

133.016

87.75

40.079

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