1172 The Methods of Growth Econometrics
- Only now are researchers beginning to engage with some of the issues they raised, such
as the varying conditions under which it is appropriate to use international rather than
national prices in making productivity comparisons and constructing capital stocks. - A relevant question, not often asked, is how high the correlation between the proxy and
the true predictor has to be for the estimated regression coefficient on the proxy to be
of the “true” sign. Krasker and Pratt (1986, 1987) have developed methods that can be
used to establish this under surprisingly general assumptions. - As Sala-i-Martin (1991) has argued, various specific indicators of macroeconomic insta-
bility should perhaps be seen as symptoms of some deeper, underlying characteristic of
a country.
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