Good policy or good luck?

William Easterly, Michael Kremer, Lant Pritchett, Lawrence H. Summers

    Research output: Contribution to journalArticlepeer-review


    Much of the new growth literature stresses country characteristics, such as education levels or political stability, as the dominant determinant of growth. However, growth rates are highly unstable over time, with a correlation across decades of 0.1 to 0.3, while country characteristics are stable, with cross-decade correlations of 0.6 to 0.9. Shocks, especially those to terms of trade, play a large role in explaining variance in growth. These findings suggest either that shocks are important relative to country characteristics in determining long-run growth, or that worldwide technological change determines long-run growth while country characteristics determine relative income levels.

    Original languageEnglish (US)
    Pages (from-to)459-483
    Number of pages25
    JournalJournal of Monetary Economics
    Issue number3
    StatePublished - Dec 1993


    • Economic growth

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics


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