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Growth miracles and failures in a Markov switching classification model of growth
Kerekes, Monika ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleGrowth miracles and failures in a Markov switching classification model of growth
AuthorKerekes, Monika
InstitutionUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages63 S.
Series Discussion Paper / School of Business & Economics ; 2009/11 : Economics
KeywordsEconomic Growth; Regime Switching; Latent Class Models
Classification (DDC)339 Macroeconomics and related topics
Also published in
AbstractAcknowledging the fact that the growth experience of countries is seldom well described
by the average growth rate, this paper aims at identifying countries that are similar in
terms of their growth process, thus emphasizing the dynamics of growth rates. To that
end, the growth experience of countries is interpreted as a Markov switching process with
countries switching between four distinct growth regimes: crisis, stagnation, stable growth,
and miracle growth. In the model, different growth patterns arise because countries switch
between the growth regimes with different frequencies. In order to account for the distinct
dynamics, the traditional Markov switching model is extended by a classification
mechanism that endogenously assigns countries exhibiting similar dynamics into the same,
and countries exhibiting distinct dynamics into different clusters. Three distinct growth
clusters are obtained: the first cluster consists of countries that have achieved relatively
fast and steady growth mainly by spending time in the stable and the miracle growth
regime. Countries in the second cluster have achieved only moderate growth and often
found themselves in stagnation for longer periods. The third cluster might be referred as a
growth failure cluster because the countries associated with this cluster have suffered from
small growth rates and frequent crises. It appears that developing countries can avoid
falling into the growth failure cluster by securing a minimum amount of human capital. In
contrast to that, the most distinguishing feature of the countries in the successful growth
cluster is their reasonable quality of institutions.
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FU DepartmentDepartment Business and Economics
Other affiliation(s)Osteuropa-Institut Wirtschaft
Year of publication2009
Type of documentBook
LanguageEnglish
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Created at2009-08-05 : 09:55:57
Last changed2014-01-23 : 04:20:11
 
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000002844
DOI978-3-941240-05-6
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