Growth and Volatility Reconsidered: Reconciling Opposite Views
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%.
