Growth Regressions and What the Textbooks Don't Tell You

The paper discusses three econometric problems that are rarely given adequate discussion in textbooks: model uncertainty, parameter heterogeneity, and outliers. Leamer's extreme bounds analysis can be adapted to address all three problems simultaneously. Two examples are presented based on an influential cross-country growth paper by Levine and Renelt (1992). Copyright 2000 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research