Trade as a Threshold Variable for Multiple Regimes
نویسنده
چکیده
This paper employs the data-sorting method developed by Hansen (2000) which allows the data to endogenously select regimes using di®erent variables. It is shown that openness, as measured by the trade share to GDP, is a threshold variable that can cluster middle-income countries into two distinct regimes that obey di®erent statistical models. Our result suggests that openness may not be as crucial in the growth process of low and high-income countries but it is instrumental in identifying middle-income countries into high and low-growth groups.
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