Blunt Instruments: Avoiding Common Pitfalls in Identifying the Causes of Economic Growth
Open accessAbstract
Concern has intensified in recent years that many instrumental variables used in widely-cited growth regressions may be invalid, weak, or both. Attempts to remedy this general problem remain inadequate. We show how a range of published studies can offer more evidence that their results are not spurious. Key steps include: grounding growth regressions in more generalized theoretical models, deployment of new methods for estimating sensitivity to violations of exclusion restrictions, opening the “black box” of GMM with supportive evidence of instrument strength, and utilization of weak-instrument robust tests and estimators. (JEL C52, E23, F35, O41, O47)
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The orthogonality condition between IV and the error term can be violated when the estimated equation includes no relevant variables correlated with the instruments.
“However, it must be noted that the orthogonality condition between IV and the error term can be violated when the estimated equation include no relevant variables correlated with the instruments.”
From Fertility Transitions in Developing Countries: Convergence, Timing, and Causes (2019) · cites this paper as Bazzi and Clemens (2013)
Cites
Initial conditions and moment restrictions in dynamic panel data models
Blundell, R., & Bond, S. (1998) · Journal of Econometrics · doi:10.1016/s0304-4076(98)00009-8 · Cited by 22,571 · see citing works
Testing for Weak Instruments in Linear IV Regression
Stock, J., & Yogo, M. (2002) · doi:10.3386/t0284 · Cited by 1,842 · see citing works
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Fertility Transitions in Developing Countries: Convergence, Timing, and Causes
Papagni, E. (2019) · SSRN Electronic Journal · doi:10.2139/ssrn.3522996 · Cited by 1 · see citing works
- Authors
- Bazzi, S., & Clemens, M. A.
- Affiliations
- University of California San Diego (US)
- Center for Global Development (US)
- ORCID
- Clemens, Michael A
- Venue
- American Economic Journal: Macroeconomics
- Publisher
- American Economic Association
- Published
- 2013-04-01
- Volume
- 5
- Issue
- 2
- Pages
- 152-186
- ISSN
- 1945-7707 (ISSN-L)
- 1945-7715
- OpenAlex
- W2130911419
- Cited by
- 640
- References
- 2
- Citations by year
- 2026: 14 · 2025: 27 · 2024: 32 · 2023: 62 · 2022: 71 · 2021: 64 · 2020: 46 · 2019: 37 · 2018: 48 · 2017: 40 · 2016: 50 · 2015: 52 · 2014: 51 · 2013: 14 · 2012: 9
- FWCI
- 121.19
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- American Economic Journal Macroeconomics (publishedVersion)
- SSRN Electronic Journal (acceptedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Physical Sciences › Computer Science › Information Systems › Economic Growth and Development
- Keywords
- economic growth, instrumental variables, weak instruments, exclusion restriction, growth regressions, generalized method of moments, assessment validity
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