Document Type : Research Paper

Authors

• Asadollah Jalalabadi ¹
• Javid Bahrami ²

¹ Ph.D. in Economic Sciences, Faculty of Economics, Allameh Tabataba'i University

² Associate Professor, Faculty of Economics, Allameh Tabataba'i University

Abstract

Due to uncertainty in economic growth theories, existence of various proxies for
effective factors on economic growth, and lack of indication of the most appropriate
econometric model for investigating effective variables on economic growth, the empirical
growth regressions have always faced uncertainty. To investigate this phenomenon, we
should move from the classical econometrics towards the approaches which can
appropriately deal with uncertainty. One of these approaches is the !Bayesian Averaging of
Classical Estimates Approach" which has been used in this article to evaluate the uncertainty
of the effects of trade openness on economic growth in developing countries (52 countries)
during 1970 and 2006. The research findings indicate that the !Composite Trade Intensity"
which is considered as a suitable alternative for trade openness, has a positive and definite
effect on economic growth of these countries in the long run. Furthermore, it is revealed that
other criteria such as !Unweighted Averages of Tariff Rates", !Terms of Trade Growth" and
!Sachs & Warner openness indicator" (1995) # as  proxies for trade openness # do not have
definite and determining effects on economic growth of these countries in the long run.

Keywords

• Bayesian averaging
• economic growth
• trade openness
• composite trade intensity
• tariff rates
• uncertainty
• robustness