Labs for Weil, Economic Growth: Lab 12C

Lab 12C
Government and Growth
Assignment
The government of Nigeria has commissioned you to study the effects of government on the
growth process. Using the results of your cross-country study and taking into account current
measures of government policy in Nigeria, Nigerian government officials would like you to tell
them which aspect of their government should they change first in order to get the largest growth
impact. In other words, if you could recommend only one policy change to the Nigerian
government, what would it be?
In answering this question, you will need to be sure to control for variables in your regression that
might be related to government policy and also to growth. As you think about the appropriate
empirical specification, consider carefully the mechanisms through which you believe
government affects growth. Your ideas will determine whether or not your empirical
specification contains a direct effect of government on growth or an indirect effect (i.e., an effect
that operates by affecting a fundamental variable that has a direct effect).
Of course, in order to make a convincing recommendation, you will need to interpret your results,
describe your data, your methods, and the shortcomings of your analysis. Ultimately, you will
need to make your recommendation based on both statistical significance and the magnitude of
the impact of these coefficients.