American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Blunt Instruments: Avoiding Common Pitfalls in Identifying the Causes of Economic Growth
American Economic Journal: Macroeconomics
vol. 5,
no. 2, April 2013
(pp. 152–86)
Abstract
Concern has intensified in recent years that many instrumental variables used in widely-cited growth regressions may be invalid, weak, or both. Attempts to remedy this general problem remain inadequate. We show how a range of published studies can offer more evidence that their results are not spurious. Key steps include: grounding growth regressions in more generalized theoretical models, deployment of new methods for estimating sensitivity to violations of exclusion restrictions, opening the "black box" of GMM with supportive evidence of instrument strength, and utilization of weak-instrument robust tests and estimators. (JEL C52, E23, F35, O41, O47)Citation
Bazzi, Samuel, and Michael A. Clemens. 2013. "Blunt Instruments: Avoiding Common Pitfalls in Identifying the Causes of Economic Growth." American Economic Journal: Macroeconomics 5 (2): 152–86. DOI: 10.1257/mac.5.2.152Additional Materials
JEL Classification
- C52 Model Evaluation, Validation, and Selection
- E23 Macroeconomics: Production
- F35 Foreign Aid
- O41 One, Two, and Multisector Growth Models
- O47 Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence