SEARCH

SEARCH BY CITATION

Keywords:

  • C4;
  • C8;
  • O4

Abstract

We re-examine studies of cross-country growth regressions by Levine and Renelt (American Economic Review, Vol. 82, 1992, pp. 942–963) and Sala-i-Martin (American Economic Review, Vol. 87, 1997a, pp. 178–183; Economics Department, Columbia, University, 1997b). In a realistic Monte Carlo experiment, their variants of Edward Leamer's extreme-bounds analysis are compared with a cross-sectional version of the general-to-specific search methodology associated with the LSE approach to econometrics. Levine and Renelt's method has low size and low power, while Sala-i-Martin's method has high size and high power. The general-to-specific methodology is shown to have a near nominal size and high power. Sala-i-Martin's method and the general-to-specific method are then applied to the actual data from Sala-i-Martin's original study.