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Title: |
Estimating Savings and Growth Functions in Developing Economies: A
Simultaneous Equations Approach |
| Author: |
Zegeye, Aklilu
A. |
| Author
Affiliation: |
US Dept of
Labor |
| Source: |
International Economic Journal, Autumn 1994, v. 8, no. 3, pp. 89-105 |
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Publication Date: |
Autumn 1994 |
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Abstract: |
There is a two-way influence between the
savings rate on the one hand and some of its determinants on the other
(i.e., a problem of simultaneity exists). This study specifies a general
production function to generate a growth rate function, and estimates
savings and growth equations simultaneously. A Hausman specification
test examines the correct system specification, and determines whether
2SLS or 3SLS is the appropriate estimation technique. The results show
that a simultaneous equations model is a better estimation technique
(2SLS or 3SLS) than a single equation system (OLS), and that the
full-information method (3SLS) provides better estimates than a
limited-information method (2SLS). |
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