Table 4.

. | Difference GMM . | System GMM . |
---|---|---|

Growth_{c,t−1} | 0.018 | 0.038^{**} |

(0.91) | (2.11) | |

Underval | 0.013 | 0.037^{**} |

(0.36) | (2.46) | |

Fin devt | 0.053^{*} | 0.004 |

(3.90) | (1.08) | |

Underval × fin devt | −0.003^{*} | −0.017^{*} |

(−0.23) | (−2.75) | |

Dependency ratio_{t−1} | −0.001^{***} | −0.000^{*} |

(−1.86) | (−2.67) | |

Trade openness_{t−1} | −0.028^{*} | −0.009^{*} |

(−5.38) | (−4.18) | |

Govt. expenditure share_{t−1} | −0.496^{*} | −0.072^{*} |

(−8.98) | (−4.97) | |

Investment share_{t−1} | 0.247^{*} | 0.085^{*} |

(5.60) | (5.51) | |

Fixed effects | ||

Economy fixed effect | Yes | Yes |

Year fixed effect | Yes | Yes |

Observations | 3,529 | 1,889 |

AR(2) | 0.101 | 0.187 |

Sargan | 0.103 | 0.201 |

. | Difference GMM . | System GMM . |
---|---|---|

Growth_{c,t−1} | 0.018 | 0.038^{**} |

(0.91) | (2.11) | |

Underval | 0.013 | 0.037^{**} |

(0.36) | (2.46) | |

Fin devt | 0.053^{*} | 0.004 |

(3.90) | (1.08) | |

Underval × fin devt | −0.003^{*} | −0.017^{*} |

(−0.23) | (−2.75) | |

Dependency ratio_{t−1} | −0.001^{***} | −0.000^{*} |

(−1.86) | (−2.67) | |

Trade openness_{t−1} | −0.028^{*} | −0.009^{*} |

(−5.38) | (−4.18) | |

Govt. expenditure share_{t−1} | −0.496^{*} | −0.072^{*} |

(−8.98) | (−4.97) | |

Investment share_{t−1} | 0.247^{*} | 0.085^{*} |

(5.60) | (5.51) | |

Fixed effects | ||

Economy fixed effect | Yes | Yes |

Year fixed effect | Yes | Yes |

Observations | 3,529 | 1,889 |

AR(2) | 0.101 | 0.187 |

Sargan | 0.103 | 0.201 |

GMM = generalized moment method.

Notes:

1. t-statistics are in parenthesis.

2. Columns (1) and (2) report the results of difference GMM and system GMM, respectively.

3. Lagged periods are t-2 and t-3.

4. ^{***} = 10% level of statistical significance, ^{**} = 5% level of statistical significance, ^{*} = 1% level of statistical significance.

Sources: Authors’ calculations based on World Bank. “World Development Indicators.” http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators; Penn World Tables 8.0. http://www.rug.nl/research/ggdc/data/pwt/

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