Growth and Volatility Reconsidered: Reconciling Opposite Views
Table 7
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. All regressions include year dummies.
Dynamic models estimations
Estimation
LSDV
LSDV
LSDV
GMM-SYS
GMM-SYS
GMM-SYS
IV 2sls
IV 2sls
IV 2sls
GDP volatility
−0.248
−0.931
−0.053
−0.392
(−1.59)
(−1.43)
(−0.29)
(−0.56)
Consumption volatility
−0.769***
−0.396**
−0.470**
−0.304
(−2.83)
(−2.16)
(−2.11)
(−1.26)
Investment volatility
0.169*
0.341*
0.13
0.195
(1.78)
(1.66)
(1.66)
(0.92)
Government consumption volatility
0.252*
0.372***
0.330*
0.360**
(1.85)
(2.70)
(2.05)
(2.12)
GDP growth ()
0.365***
0.309***
0.299***
0.375***
0.340***
0.345***
(4.95)
(4.33)
(4.02)
(4.44)
(4.24)
(4.33)
Education
0.004
0.003
0.004
0.007
0.008
0.009
(0.66)
(0.48)
(0.68)
(0.66)
(0.83)
(0.77)
Population growth
0.100
−0.024
0.16
−0.440
−0.534
−0.522
(0.22)
(−0.06)
(0.33)
(−0.92)
(−1.08)
(−0.98)
Initial GDP
−0.048***
−0.021
−0.028**
−0.015
−0.013
−0.015
(−3.90)
(−1.64)
(−2.12)
(−0.77)
(−0.68)
(−0.65)
Investment share of GDP
−0.085***
−0.064**
−0.060***
−0.075**
−0.068**
−0.075**
(−3.49)
(−3.14)
(−3.00)
(−2.37)
(−2.17)
(−2.24)
Observations
675
675
675
725
725
725
Country dummies
Yes
Yes
Yes
No
No
No
Instruments
Yes
Yes
Yes
Yes
Yes
Yes
Kleibergen-Paap Wald statistic
140.47
56.569
23.352
Hansen /Sargan test ( value)
0.715
0.738
0.654
0.243
0.592
0.558
Arellano-Bond test (AR2)
0.837
0.707
0.752
Note: -statistics in parenthesis, robust SEs. *Significance at 10%, **significance at 5%, and ***significance at 1%.
