Growth and Volatility Reconsidered: Reconciling Opposite Views
Table 8
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 (21 countries). Horizon: 1978–2007. Annual observations. All regressions include year dummies.
Static models estimations—restricted sample
Estimation
FE
FE
FE
FE-IV GMM
FE-IV GMM
FE-IV GMM
GDP volatility
−0.806
0.038
−0.583**
−0.214
(−0.41)
(0.15)
(−2.24)
(−0.66)
Consumption volatility
−0.941***
−0.953***
−0.881***
−0.816***
(−4.63)
(−4.56)
(−4.07)
(−3.48)
Investment volatility
0.105**
0.096*
−0.025
0.016
(2.37)
(1.74)
(−0.41)
(0.22)
Government consumption volatility
0.293***
0.291***
0.268*
0.285*
(2.68)
(2.65)
(1.65)
(1.75)
Education
0.005
0.005
0.005
0.006
0.004
0.005
(1.27)
(1.23)
(1.24)
(0.69)
(0.58)
(0.62)
Population growth
−0.497
−0.331
−0.335
0.761
0.922
0.920
(−1.14)
(−0.86)
(−0.87)
(1.14)
(1.49)
(1.50)
Initial GDP
−0.066***
−0.054***
−0.054***
−0.077***
−0.065***
−0.065***
(−3.32)
(−2.85)
(−2.84)
(−3.51)
(−3.18)
(−3.22)
Investment share of GDP
0.056***
0.062***
0.062***
−0.089***
−0.080***
−0.079***
(4.79)
(5.82)
(5.82)
(−3.95)
(−3.00)
(−2.99)
Observations
630
630
630
567
567
567
Instruments
no
no
no
yes
yes
yes
Hansen statistic ( value)
0.118
0.234
0.258
Kleibergen-Paap Wald statistic
90.809
89.438
90.061
Note: -statistics in parenthesis, robust SEs. *Significance at 10%, **significance at 5%, and ***significance at 1%.
