Dear All,
I am working on estimating Debt-Growth Threshold but confused about some points. My questions are;
- How do we calculate initial GDP Per Capita? Shall we do it in STATA or excel file? Please explain with an example how do we calculate initial GDP PC?
- While estimating PSTR (Panel Smooth Transition Regression) many papers use different ways to estimate it for different country groups. Shall I go this way; first estimate linear equation of PSTR,-------> then calculate FIxed effects------> then calculate 2SLS-------> then calculate reduced form quadratic equation--------> Is this right way to estimate PSTR? Please guide step by step.
Thanks.
Herndon and co-authors provide all the material to replicate all the work of R&R:
https://www.peri.umass.edu/publication/item/526-does-high-public-debt-consistently-stifle-economic-growth-a-critique-of-reinhart-and-rogoff
The paper is publish in the CJE:
Article Does High Public Debt Consistently Stifle Economic Growth? A...
I am bit confused on how you define 'initial GDP'. In the regression models I am aware of (usually Barro-style regressions) initial GDP is not 'estimated' is already included in the data and is defined as the GDP of each country at the first year of the dataset.
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