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Why Run a Million Regressions? Endogenous Policy and Cross Country Growth

Rehme, Günther :
Why Run a Million Regressions? Endogenous Policy and Cross Country Growth.
In: Darmstadt Discussion Papers in Economics, 140. Darmstadt
[Report], (2004)

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Item Type: Report
Title: Why Run a Million Regressions? Endogenous Policy and Cross Country Growth
Language: English
Abstract:

This paper analyzes the link between growth and public policy when the latter depends on economically important fundamentals. When policy is endogenous the measured effects of policy on growth will generally be biased. Using a widely quoted theoretical model, the signs of the biases are derived. It is shown that the usually reported effects on growth of tax rate variables related to GDP, the ratio of public investment to total investment and the ratio of redistributive transfers to GDP are generally biased downwards. Based on these signed biases the paper discusses some empirical results that seem puzzling from a theoretical viewpoint.

Series Name: Darmstadt Discussion Papers in Economics
Volume: 140
Place of Publication: Darmstadt
Uncontrolled Keywords: Growth, Public Policy, Cross-Sectional Models
Classification DDC: 300 Sozialwissenschaften > 330 Wirtschaft
Divisions: 01 Law and Economics > Volkswirtschaftliche Fachgebiete > Economic Theory
01 Law and Economics > Volkswirtschaftliche Fachgebiete
01 Law and Economics
Date Deposited: 20 Nov 2008 08:17
Last Modified: 29 Jan 2016 13:48
URN: urn:nbn:de:tuda-tuprints-47860
Additional Information:

JEL - Classification: O4, C2

Additional Information:

JEL - Classification: O4, C2

URI: http://tuprints.ulb.tu-darmstadt.de/id/eprint/4786
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