Growth and Volatility Reconsidered: Reconciling Opposite Views
Table 9
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 (21 countries). Horizon: 1978–2007. Annual observations. All regressions include year dummies.
Dynamic models estimations—restricted sample
Estimation
LSDV
LSDV
LSDV
SYS-GMM
SYS-GMM
SYS-GMM
IV 2sls
IV 2sls
IV 2sls
GDP volatility
−0.339**
−0.089
−0.135
0.700
(−1.99)
(−0.40)
(−0.63)
(1.54)
Consumption volatility
−0.586***
−0.560***
−0.386**
−0.562**
(−3.65)
(−3.14)
(−2.17)
(−2.15)
Investment volatility
−0.020
−0.001
−0.059
−0.222*
(−0.43)
(−0.02)
(−1.01)
(−1.79)
Government consumption volatility
0.235**
0.242**
0.291*
0.289*
(2.04)
(2.06)
(1.79)
(1.72)
GDP growth ()
0.478***
0.430***
0.428***
0.473***
0.432***
0.451***
(7.30)
(6.92)
(6.89)
(4.14)
(3.58)
(3.53)
Education
0.004
0.004
0.004
−0.004
−0.001
−0.001
(0.70)
(0.72)
(0.73)
(−0.32)
(−0.02)
(−0.13)
Population growth
0.220
0.267
0.268
0.111
−0.112
−0.007
(0.50)
(0.63)
(0.63)
(0.16)
(−0.22)
(−0.01)
Initial GDP
−0.036**
−0.032**
−0.034**
−0.012
−0.012
−0.012
(−2.23)
(−2.23)
(−2.24)
(−0.56)
(−0.74)
(−0.62)
Investment share of GDP
−0.072***
−0.063***
−0.062***
−0.135**
−0.094*
−0.117***
(−3.72)
(−3.40)
(−3.40)
(−2.47)
(−1.69)
(−2.66)
Observations
567
567
567
609
609
609
Country dummies
Yes
Yes
Yes
No
No
No
Instruments
Yes
Yes
Yes
Yes
Yes
Yes
Kleibergen-Paap Wald statistic
212.340
202.231
201.867
Hansen /Sargan test ( value)
0.713
0.571
0.562
0.182
0.215
0.214
Arellano-Bond test (AR2) ( value)
0.862
0.745
0.768
Note: -statistics in parenthesis, robust SEs. *Significance at 10%, **significance at 5%, and ***significance at 1%.
