Growth and Volatility Reconsidered: Reconciling Opposite Views
Table 11
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 (25 countries). Horizon: 1978–2007. Annual observations. All regressions include year dummies. All regressions are population weighted.
Dynamic models weighted estimations
Estimation
LSDV
LSDV
LSDV
LSDV
LSDV
LSDV
IV 2sls
IV 2sls
IV 2sls
GDP volatility
−0.042
0.396*
−0.271***
0.436*
(−0.46)
(1.92)
(−2.71)
(1.76)
Consumption volatility
−0.583***
−0.683***
−0.515***
−0.630***
(−4.67)
(−5.06)
(−3.51)
(−3.85)
Investment volatility
0.074***
−0.200
−0.120
−0.114
(2.38)
(−0.34)
(−0.31)
(−1.64)
Government consumption volatility
0.013
−0.030
−0.075
−0.122
(0.11)
(−0.20)
(−0.49)
(−0.79)
GDP growth ()
0.183***
0.142***
0.142***
0.430***
0.399***
0.399***
(4.70)
(3.59)
(3.61)
(8.65)
(7.92)
(7.92)
Education
0.004
0.005
0.005
0.005
0.005
0.005
(0.86)
(1.19)
(1.28)
(0.88)
(1.00)
(0.98)
Population growth
−0.282
−0.378
−0.414
0.518
0.360
0.346
(−0.87)
(−1.17)
(−1.28)
(1.32)
(0.92)
(0.77)
Initial GDP
−0.032***
−0.139
−0.120
−0.036***
−0.019*
−0.017
(−4.07)
(−1.59)
(−1.34)
(−3.68)
(−1.80)
(−1.56)
Investment share of GDP
0.092***
0.093***
0.093***
−0.096***
−0.099***
−0.096***
(8.20)
(8.30)
(8.30)
(−4.96)
(−4.98)
(−4.99)
Observations
725
725
725
675
675
675
Country dummies
Yes
Yes
Yes
Yes
Yes
Yes
Instruments
No
No
No
Yes
Yes
Yes
Kleibergen-Paap Wald statistic
275.699
269.17
268.73
Sargan test ( value)
0.136
0.166
0.208
Note: -statistics in parenthesis, robust SEs. *Significance at 10%, **significance at 5%, and ***significance at 1%.
