AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Mastering Panel Metrics: Causal Impact of Democracy on Growth
AEA Papers and Proceedings
vol. 109,
May 2019
(pp. 77–82)
Abstract
We revisit the panel data analysis of Acemoglu et al. (forthcoming) on the relationship between democracy and economic growth using state-of-the-art econometric methods. We argue that panel data settings are high-dimensional, resulting in estimators to be biased to a degree that invalidates statistical inference. We remove these biases by using simple analytical and sample-splitting methods, and thereby restore valid statistical inference. We find that debiased fixed effects and Arellano-Bond estimators produce higher estimates of the long-run effect of democracy on growth, providing even stronger support for the key hypothesis of Acemoglu et al.Citation
Chen, Shuowen, Victor Chernozhukov, and Iván Fernández-Val. 2019. "Mastering Panel Metrics: Causal Impact of Democracy on Growth." AEA Papers and Proceedings, 109: 77–82. DOI: 10.1257/pandp.20191071Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- C23 Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
- C33 Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models
- O43 Institutions and Growth