Growth and Volatility Reconsidered: Reconciling Opposite Views
Table 6
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.
Static models estimations
Estimation
FE
FE
FE
FE-IV GMM
FE-IV GMM
FE-IV GMM
GDP volatility
−0.127
0.177
−0.417*
−0.981
(−0.88)
(0.69)
(−1.93)
(−1.62)
Consumption volatility
−0.549***
−0.613***
−0.907**
−0.525***
(−3.28)
(−3.46)
(−3.06)
(−2.50)
Investment volatility
0.049
0.012
0.154
0.334*
(1.18)
(0.21)
(1.56)
(1.77)
Government consumption volatility
0.460***
0.443***
0.323*
0.442***
(3.83)
(3.72)
(1.86)
(2.71)
Education
0.003
0.003
0.003
0.005
0.002
0.003
(0.58)
(0.66)
(0.50)
(0.60)
(0.31)
(0.51)
Population growth
−0.736*
−0.823**
−0.863**
0.501
0.340
0.542
(−1.72)
(−2.04)
(−2.21)
(0.89)
(0.67)
(1.00)
Initial GDP
−0.050***
−0.032**
−0.031**
−0.066***
−0.035**
−0.041**
(−3.52)
(−2.23)
(−2.20)
(−4.15)
(−2.11)
(−2.58)
Investment share of GDP
0.084***
0.083***
0.084***
−0.106***
−0.084***
−0.082***
(6.73)
(7.19)
(7.26)
(−3.28)
(−3.22)
(−3.25)
Observations
750
750
750
675
675
675
Instruments
no
no
no
yes
yes
yes
Hansen statistic ( value)
0.321
0.76
0.87
Kleibergen-Paap Wald statistic
69.231
41.711
27.638
Note: -statistics in parenthesis, robust SEs. *Significance at 10%, **significance at 5%, and ***significance at 1%.
