The Pillars of Potential Growth and the Role of Policy: A Panel Data Approach
Lanzafame, Matteo; Felipe, Jesus; Sotocinal, Noli; Bayudan-Dacuycuy, Connie | May 2016
Abstract
Potential output growth generally decelerated after the global financial crisis during 2008–2009. This paper examines the possible determinants of potential output growth using Bayesian Model Averaging and assesses how the determinants can be used to increase the growth of potential output. It finds that the long-term growth of working-age population, the tertiary level gross enrollment ratio, the technology gap with the United States (US), labor market rigidity, trade openness, financial integration and the quality of institutions robustly affect potential output growth. Using Harrod’s definition of potential output growth as the sum of the long-run growth rates of the labor force and labor productivity, we find that the trend growth rate of working-age population is a good proxy variable for long-run labor force growth. Under this definition, the other determinants affect potential output growth through their impact on the growth of labor productivity. The paper finds support for the hypotheses that tertiary enrollment and trade openness affects potential output growth nonlinearly. It also finds that trade openness and tertiary enrollment have nonlinear effects on potential output growth, and that the technology gap with the US and financial integration have statistically significant interaction effects on potential output growth. Results suggest that reforms aimed at reducing the technology gap with the US and increasing the extent of financial integration have lower impact on countries with high-quality institutions.
Citation
Lanzafame, Matteo; Felipe, Jesus; Sotocinal, Noli; Bayudan-Dacuycuy, Connie. 2016. The Pillars of Potential Growth and the Role of Policy: A Panel Data Approach. © Asian Development Bank. http://hdl.handle.net/11540/8814.ISSN
2313-6537 (Print)
2313-6545 (e-ISSN)
Keywords
Comprehensive Development Framework
Development Challenges
Development Planning
Millennium Development Goals
Policy Development
Program Evaluation
Performance Evaluation
Evaluation Criteria
Human Capital Development
Capital Market Development
Development Economics
Financial Sector Development
Technology Development
World Development Indicators
Evaluation Methods
Aid And Development
Asian Development Bank
Comprehensive Development Framework
Development Cooperation
Development Management
Development Planning
Development Strategies
Development In East Asia
Development Planning
Development Research
Performance Evaluation
Evaluation Methods
Evaluation
Job Evaluation
Staff Development
Development assistance
ADB
Curriculum development
Development assistance
Development aid
Development indicators
Development potential
Development models
Project appraisal
Performance appraisal
Economic development
Economic indicators
Government programs
Economic growth
Economic policy
Industrial development
Industrial policy
Technology assessment
Economic evaluation
Economic forecast
Input output analysis
Rural planning
Aid coordination
Industrial projects
Infrastructure projects
Natural resources policy
Educational development
Development strategy
Development models
Economic development
Performance appraisal
Needs assessment
Input output analysis
ADB
Employment
Performance appraisal
Project failure
Project impact
Project appraisal
Career development
Vocational training
Communication in rural development
Communication in community development
Infrastructure
Central planning
Endowment of research
Partnership
Joint venture
Nation-building
Risk assessment
Economic development projects
Economic forecasting
Industrial research
Participatory monitoring and evaluation
Economic policy
Economic forecasting
Communication in rural development
Communication in community development
Economic development projects
Development banks
Economic forecasting
Environmental auditing
Cumulative effects assessment
Human rights and globalization
Participative management
Grievance procedures
Supervisors
Vocational guidance
Labor policy
Rural manpower policy
Career development
Applications for positions
Affirmative action programs
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