Aghion, PhilippeDurlauf, Steven2017-08-282017-08-282009https://hdl.handle.net/10986/28001This paper focuses on how growth theory can guide growth policy design. It first argues that policy matters for growth, in particular when policy variables are interacted with country?specific variables (financial development, institutional environment, technological development, and so forth). Second, it argues that the Schumpeterian paradigm does a better job at delivering policy prescriptions that vary with country characteristics. Third, it discusses the advantages and drawbacks of growth regression analysis. Finally, it briefly describes and then questions the recently proposed 'growth diagnostic' approach.en-USCC BY 3.0 IGOAGGREGATE INVESTMENTAGGREGATE OUTPUTAGGREGATE PRODUCTION FUNCTIONALLOCATIONAMERICAN ECONOMIC REVIEWARBITRAGEAVERAGE GROWTHAVERAGE GROWTH RATEAVERAGE LEVELBANK LOANSBLACK MARKETBLACK MARKET PREMIUMBUDGET DEFICITBUDGET DEFICITSBUDGETARY POLICIESBUSINESS CYCLECAPITAL ACCUMULATIONCAPITAL INVESTMENTCAPITAL STOCKCASE STUDIESCOMPETITION POLICIESCOMPETITION POLICYCOMPLEMENTARITIESCONTEMPORANEOUS EXTERNALITIESCORPORATE PROFITSCOUNTRY CASECOUNTRY CHARACTERISTICSCOUNTRY LEVELCREDIT CONSTRAINTCREDIT CONSTRAINTSCREDIT RATIONINGCROSS COUNTRYDATA SETSDECENTRALIZATIONDECREASING RETURNSDEMOCRACYDETERMINANTS OF GROWTHDEVELOPMENT PRACTITIONERSDIMINISHING RETURNSDISTRIBUTION OF WEALTHDOMESTIC SAVINGSECONOMETRICSECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC INSTITUTIONSECONOMIC LITERATUREECONOMIC MANAGEMENTECONOMIC POLICIESECONOMIC RESEARCHECONOMIC STUDIESECONOMIC THEORYEDUCATIONAL ATTAINMENTEFFECT OF RECESSIONSELASTICITYELASTICITY OF SUBSTITUTIONEMPIRICAL STUDIESEMPIRICAL WORKEQUILIBRIUM PRICESEXPLANATORY VARIABLESEXTERNALITIESFACTOR ACCUMULATIONFINANCIAL DEVELOPMENTFINANCIAL SYSTEMSFISCAL POLICIESFIXED EFFECTSFOREIGN DIRECT INVESTMENTGDPGOVERNMENT EXPENDITUREGOVERNMENT SUBSIDIESGROWTH ANALYSISGROWTH DETERMINANTSGROWTH DIAGNOSTICSGROWTH EFFECTSGROWTH EQUATIONGROWTH LITERATUREGROWTH MODELGROWTH MODELSGROWTH PATHGROWTH PERFORMANCEGROWTH POLICIESGROWTH POLICYGROWTH POTENTIALGROWTH PROBLEMGROWTH PROCESSGROWTH RATEGROWTH RATE OF OUTPUTGROWTH RATESGROWTH REGRESSIONGROWTH REGRESSIONSGROWTH RESULTSGROWTH THEORIESGROWTH THEORYHIGH GROWTHHIGH GROWTH RATEHUMAN CAPITALHUMAN CAPITAL INVESTMENTINCOMEINCOME DISTRIBUTIONINCREASE GROWTHINCREASING RETURNSINCUMBENTINDUSTRIALIZED COUNTRIESINFLATIONINSTITUTIONAL ENVIRONMENTINSTRUMENTAL VARIABLESINTELLECTUAL CAPITALINTERACTION COEFFICIENTINTERACTION TERMSINTEREST RATEINTERNATIONAL TRADELABOR MARKETLEVEL OF DEVELOPMENTLEVELS OF CAPITALLINK BETWEEN VOLATILITYLIQUIDITYLONG RUNLOW INTEREST RATELOW INTEREST RATESMACRO POLICYMACROECONOMIC POLICYMACROECONOMIC STABILITYMACROECONOMIC VOLATILITYMACROECONOMICSMARGINAL PRODUCTMARGINAL VALUEMARKET CAPITALIZATIONMARKET IMPERFECTIONSMICROECONOMICSMODEL OF GROWTHMONETARY ECONOMICSMONETARY UNIONMONEY SUPPLYMONOPOLISTIC COMPETITIONNATURAL RESOURCESNEOCLASSICAL GROWTH MODELNEOCLASSICAL GROWTH THEORYNEOCLASSICAL MODELNEOCLASSICAL THEORYNET INVESTMENTNEW GROWTH THEORIESOPPORTUNITY COSTPANEL REGRESSIONSPER CAPITA GROWTHPOLICY CHANGESPOLICY MAKERSPOLICY PACKAGESPOLICY VARIABLESPOLITICAL ECONOMYPOSITIVE EFFECTSPOVERTY REDUCTIONPRODUCTION FUNCTIONPRODUCTIVITYPRODUCTIVITY GROWTHPROFIT MAXIMIZATIONPROMOTING GROWTHPROPERTY RIGHTSRATE OF RETURNREAL INTEREST RATESRECESSIONRECESSIONSREGRESSION ANALYSISREGRESSION COEFFICIENTSREPUBLICSAVING RATESAVINGSSIGNIFICANT CORRELATIONSTAGNATIONSTATE OF KNOWLEDGESTOCK OF CAPITALSTRUCTURAL CHARACTERISTICSTAXTAXATIONTECHNICAL CHANGETECHNICAL PROGRESSTECHNOLOGICAL CHANGETECHNOLOGICAL DEVELOPMENTTECHNOLOGICAL INNOVATIONTECHNOLOGICAL PROGRESSTECHNOLOGY FRONTIERTFPTOTAL FACTOR PRODUCTIVITYTRADE LIBERALIZATIONTRADE POLICYUNIT OF CAPITALUTILITY MAXIMIZATIONWAGESWEALTHWORLD INCOME DISTRIBUTIONWorking PaperWorld Bank10.1596/28001