Semiparametric Applications in Economic Growth

Koroglu, Mustafa
Journal Title
Journal ISSN
Volume Title
University of Guelph

This dissertation consists of three essays that deals with estimation of semiparametric regression methods in macroeconomic context. Chapter 1 introduces the building-blocks of the non-/semiparametric regression methods. A literature review is provided to support the estimation methodologies employed in the subsequent chapters. I survey some nonparametric estimation techniques, including (i) the local least squares kernel estimator; (ii) nonparametric series estimator; (iii) estimation of nonparametric models with endogeneity; and (iv) nonparametric estimation of panel data models. I also survey different bootstrapping methods for nonparametric regression methods. In Chapter 2 we consider a spatial Durbin model with unknown functional-coefficients and nonparametric spatial weights. We apply series approximation method to estimate the unknown functional coefficients and spatial weighting functions via a nonparametric two-stage least squares (or 2SLS) estimation method. We illustrate proposed estimation method to re-examine national economic growth by augmenting the conventional Solow economic growth convergence model with unknown spatial interactive structures of the national economy, as well as country-specific Solow parameters, where the spatial weighting functions and Solow parameters are allowed to be a function of geographical distance and the countries' openness to trade, respectively. In Chapter 3 I re-investigate the relationship between public debt and economic growth and try to expose nonlinearity in this link through using an endogenous smooth coefficient approach. I find some evidence of parameter heterogeneity in the debt-growth link that may be governed by the institutional quality of countries. My results show a significant negative effect of public debt on economic growth for the countries with the lowest democracy score and high democracy score.

local linear regression, spatial Durbin model, series estimator, economic growth convergence model, functional coefficients