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Secification Specification 2 repeats specification 1 using a more restricted model, as we force differential growth to be related to log of aggregate volume of atlantic trade in time t and country j instead of simply being an Atlantic trader. Results are nearly identical to Specification 1. ====The Role of Initial Institutions====The authors now test the part of their hypothesis that it was predominantly societies with less absolutist initial institutions that took advantage of opportunities offered by Atlantic trade. They estimate the following model: :<math>u_{jt} = d_{t} + \delta_{j} + \sum\limits_{t>=1600} \alpha_{t} \cdot WE_{j} \cdot d_{t} + \beta_{t} \cdot ln AT_{t} \cdot PAT_{j} + \sum\limits_{t>=1500} \gamma +\epsilon_{t} \cdot I_{j,1415} \cdot d_{t} + eta \cdot ln AT_{t} \cdot PAT_{j} \cdot I_{j,1415} + epsilon_{jt}</math>
Acemoglu, Johnson, Robinson (2005) (view source)
Revision as of 15:38, 15 May 2012
, 15:38, 15 May 2012→How does the author test the hypothesis?
=== How does the author test the hypothesis? ===
====Atlantic Trading and differential Growth====
The authors test the the idea that WE growth after 1500 was primarily due to growth in countries involved with Atlantic trading or with high potential for Atlantic trading.
Specification 1 (results in table 2)::<math>u_{jt} = d_{t} + \delta_{j} + \sum\limits_{t>=1600} \alpha_{t} \cdot WE_{j} \cdot d_{t} + \sum\limits_{t>=1500} \beta_{t} \cdot PAT_{j} \cdot d_{t}+X_{jt} \cdot \gamma +\epsilon_{jt}</math>
*<math>u_{jt}</math> is urbanization in country j at time t
*d is the year effects
*<math>\delta_{j}</math> is country effects
*X is other covarriatecovariate
*PAT is potential for Atlantic Trade
Reults of Specification 1:
* when Interation term added, WE covariate becomes small and non-significant. Demenstrating Demonstrating that the interation interaction is what is important.
*Run cols 8-10 with Atlantic costline instead of Atlantic Trader, as we are concerned with Atlantic trader being an expost outcome and endogenous.
*Interation Iteration only becomes significant after dates 1600 when using AT dummuy, and 1750 when using Atlantic costline instead of expost AT result.
=== What do the authors tests achieve?===
