A non-linear sensitivity analysis of cross-country growth regressions
Mamuneas, Theofanis P.
SourceCanadian Journal of Economics
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We extend the sensitivity analysis of cross-country growth regressions of Levine and Renelt (1992) by introducing a semi-parametric formulation of their regression function. Our results differ from theirs in how certain policy variables affect growth rates. We find that distortion variables, such as the standard deviation of gross domestic credit and inflation and real exchange rate distortions, have a robust negative effect on growth. © Canadian Economics Association.