TY  - JOUR
AU  - Ghosh,Atish R.
AU  - Wolf,Holger
TI  - Thresholds and Context Dependence in Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6480
PY  - 1998
Y2  - March 1998
UR  - http://www.nber.org/papers/w6480
L1  - http://www.nber.org/papers/w6480.pdf
N1  - Author contact info:
Atish R. Ghosh
Research Department
International Monetary Fund
HQ1-09-612
700 19th Street, N.W.
Washington DC, 20431
E-Mail: aghosh@imf.org

Holger C. Wolf
Center for German and European Studies
ICC-503
School of Foreign Service
Georgetown University
Washington, DC  20057
Tel: 202/687-8079
Fax: 202/687-8359
E-Mail: moneyhist@aol.com
AB  - Is there a single recipe for fast growth?  Much of the recent cross-section empirical growth literature implicitly assumes there is.  Yet both development and growth theory   as well as casual empiricism   suggest pervasive non-linearities in the growth process.  Low inflation may  grease the wheels of commerce' while high inflation may arrest them, secondary education may be crucial for promoting growth in open economies, but be largely ineffective in war-ravaged countries, etc.  Such threshold effects and context dependence are difficult to capture in standard multivariate regressions, but are readily identified by classification tree analysis, undertaken here.  Our results suggest that both types of non-linearities are indeed pervasive. The findings go some way towards explaining the limited robustness of cross-country growth regressions, and argue against the existence of a universal growth recipe.
ER  -