A Solution To The Problem Of Too Many Instruments In Dynamic Panel Data Gmm

A Solution to the Problem of Too Many Instruments in Dynamic Panel Data GMM

The Role of Structural Reforms in Raising Economic Growth in Central America

Central America experienced moderate growth during the last decade, including in the years leading up to the global financial crisis, but the rate of convergence toward advanced country income levels has still been slow. Moreover, forecasts imply that these trends will continue. What can be done to spur higher growth in Central America? We bring new data to bear on this question-version 7.0 of the Penn World Table and a new IMF database on structural reforms. Our cross-country panel regression of economic growth using System GMM captures the importance to growth of conditional convergence, factor accumulation, and macro policies. In addition, structural efficiency is a significant factor in explaining growth performance. We construct a broad index of efficiency and find that increasing the degree of structural efficiency by one standard deviation raises growth by 1⁄2 percent. This implies that Central American countries could significantly increase their long-run growth rates by increasing the flexibility of markets and improving the quality of regulation.

The New Economic Approach to Social and Political Issues

The New Economic Approach (NEA) has revolutionized economic disciplines by positing many social and political issues as endogenous variables, and makes rigorous and scientific analysis possible through a neo-classical framework. The NEA unravels familial behaviour, fertility, marriage, altruism, discrimination, dowry, love, crime and punishment and addiction. This new approach has been revolutionary in that it accommodates tools and theories that move beyond the neoclassical framework. The new political economy, pressure groups, rent-seeking and organ donation are but a few of the issues analysed with the aid of the public choice theory, new institutional economics and the principal-agent theorem. This volume shines a light on these topics and subjects them to critical analysis. It is a unique work, catering to academics, researchers and policymakers.