Determinants of Long-Term Growth: A Bayesian
Averaging of Classical Estimates (BACE)
Approach
Gernot Doppelhofer, Ronald
I. Miller, Xavier Sala-i-Martin
NBER Working Paper No. W7750 Issued in June
2000
---- Abstract -----
This paper examines the robustness of
explanatory variables in cross-country economic growth
regressions. It employs a novel approach, Bayesian
Averaging of Classical Estimates (BACE), which
constructs estimates as a weighted average of OLS
estimates for every possible combination of included
variables. The weights applied to individual
regressions are justified on Bayesian grounds in a way
similar to the well-known Schwarz criterion. Of 32
explanatory variables we find 11 to be robustly
partially correlated with long-term growth and another
five variables to be marginally related. Of all the
variables considered, the strongest evidence is for
the initial level of real GDP per capita.