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The impact of data revisions on the robustness of growth determinants—a note on ‘determinants of economic growth: Will data tell?’
Author(s) -
Feldkircher Martin,
Zeugner Stefan
Publication year - 2012
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.2265
Subject(s) - robustness (evolution) , econometrics , bayesian probability , economics , inference , bayesian inference , prior probability , data set , computer science , artificial intelligence , biology , biochemistry , gene
SUMMARY Ciccone and Jarociński ( American Economic Journal: Macroeconomics 2010; 2 : 222–246) show that inference in Bayesian model averaging (BMA) can be highly sensitive to small data perturbations. In particular, they demonstrate that the importance attributed to potential growth determinants varies tremendously over different revisions of international income data. They conclude that ‘agnostic’ priors appear too sensitive for this strand of growth empirics. In response, we show that the found instability owes much to a specific BMA set‐up: first, comparing the same countries over data revisions improves robustness; second, much of the remaining variation can be reduced by applying an evenly ‘agnostic’ but flexible prior. Copyright © 2012 John Wiley & Sons, Ltd.