Chih Ming Tan

Are Any Growth Theories Robust

This paper investigates the strength of empirical evidence for various growth theories when there is model uncertainty with respect to the correct growth model. Using model averaging methods, we find little evidence that so-called fundamental growth theories play an important role in explaining aggregate growth. In contrast, we find strong evidence for macroeconomic policy effects and a role for unexplained regional heterogeneity, as well as some evidence of parameter heterogeneity in the aggregate production function. We conclude that the ability of cross-country growth regressions to adjudicate the relative importance of alternative growth theories is limited.

Structural Threshold Regression

This paper extends the simple threshold regression framework of Hansen (2000) and Caner and Hansen (2004) to allow for endogeneity of the threshold variable. We develop a concentrated least squares estimator of the threshold parameter based on an inverse Mills ratio bias correction. We show that our estimator is consistent and investigate its performance using a Monte Carlo simulation that indicates the applicability of the method in …nite samples.

Empirics of Growth and Development

We survey the recent literature on growth empirics in this paper. Modern growth economics has led to a rich and wide-ranging empirical literature replete with many new methodologies and many new findings. Yet in comparing the modern empirical literature to the traditional growth accounting analyses of the 1960s and 1970s, one cannot help but be struck by the relative lack of progress on substantive conclusions. The critical role of TFP found in recent work is consistent with claims as far back as Solow. Evidence of statistical notions of convergence represents a new set of stylized facts but suffers from a lack of connection to economically interesting notions of convergence. The search for empirically successful growth models has provided a range of candidate growth determinants that lie far outside the domain of the neoclassical growth model, but efforts to search for robust determinants have had mixed results, outside of the finding that physical capital accumulation affects growth, which is no surprise given the earlier literature. Evidence of nonlinearities and parameter heterogeneity is suggestive of multiple steady states and richer growth dynamics than neoclassical theories, but this evidence has yet to be integrated into a consistent whole. Together, this suggests that the next step in empirical growth research should be the unification of the vast array of statistical claims into a unified growth picture combined with efforts to link this picture more tightly with growth theories.

Understanding Changes in Attitudes towards Redistribution and Government after the Great Recession

Using the first release of the three-wave, four-year General Social Survey panel dataset, we track changes in attitudes towards redistribution and government from 2006 to 2010 to find that decreases in demand for redistribution are associated with decreases in confidence in government after the Great Recession. We use latent class analysis to systematically account for heterogeneity in preferences and uncover four to five distinct preference groups. A variety of personal characteristics predict group membership, yet movement between and within groups is associated with changes in confidence in government. Our findings indicate that political party identification is an important channel through which confidence in government shapes preferences for redistribution. This paper contributes to a growing body of literature that suggests an association between government trust and demand for redistribution. We view our results as suggestive, yet we do perform a series of falsification tests that show the decrease in confidence in government across this time period is not associated with a general desire for smaller government.

Local Measures of Intergenerational Mobility of Income, Cognitive, and Noncognitive Skills

Using NLSY data we investigate whether the observed patterns of economic mobility exhibit heterogeneity across socioeconomic groups and whether the nature of the heterogeneity can be explained by different levels of persistence in the intergenerational transmission of cognitive abilities and non-cognitive skills across socioeconomic groups. In doing so we employ the varying coefficient model (VCM) to estimate nonparametric (local) measures of intergenerational mobility (as measured by income and schooling attainment), cognitive abilities, and non- cognitive skills as smooth functions of log parental permanent income. Our findings show that intergenerational mobility exhibits nonlinear patterns. Individuals with different parental income are characterized by different degrees of intergenerational mobility. Moreover, we find evidence that suggests that patterns in the intergenerational transmission of cognitive abilities play a large role in explaining heterogeneity in intergenerational mobility. To the extent that the transmission of cognitive abilities from parents to children are a function of genetic or assortative mating factors, our findings provide some support for such explanations for economic mobility.