Robustness Procedures in Economic Growth Regression Models

Mapa, Dennis S. and Briones, Kristine Joy S. (2007): Robustness Procedures in Economic Growth Regression Models. Published in: The Philippine Review of Economics , Vol. XLIV, No. 2 (December 2007): pp. 71-84.

Abstract

A central question for empirical economics, particularly economic growth, is which explanatory variables to include and exclude in the regressions. This paper aims to identify variables strongly correlated with provincial income growth in the Philippines by applying robustness procedures in determining which variables are strongly correlated with income growth. The extreme bound analysis (EBA) and Bayesian Averaging of Classical Estimates (BACE) were applied to fifteen determinants of income growth from a data set consisting of 74 Philippine provinces for the period 1985 to 2003 to test which among the explanatory variables are strongly correlated to growth. The tests show that among the fifteen variables, five variables stand out as being robust. The log of initial income, the ARMM indicator, the expenditure GINI and its square and the proportion of young dependents are all considered as strongly correlated to growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Robust, Extreme Bound Analysis (EBA), Bayesian Averaging of Classical Estimates (BACE)
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O18 - Urban, Rural, Regional, and Transportation Analysis ; Housing ; Infrastructure; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C11 - Bayesian Analysis: General; C - Mathematical and Quantitative Methods > C0 - General > C01 - Econometrics

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