Determinants of economic growth : a bayesian panel data approach

Abstract

Model uncertainty hampers consensus on the key determinants of economic growth. Some recent cross-country cross-sectional analyses have employed Bayesian Model Averaging to tackle the issue of model uncertainty. This paper extends that approach to panel data models with country-specific fixed effects in order to simultaneously address model uncertainty and endogeneity issues. The empirical findings suggest that in a panel setting the most robust growth determinants are the price of investment goods, distance to major world cities, and political rights