ECON7040 Research Assignment
Semester 1, 2022
In this research assignment, you need to conduct an empirical research about the
determinants of cross country heterogeneity in GDP per capita.
Your research should include:
- A title and a short introduction.
- A literature review, focusing on growth empirics literature.
- An empirical section that describe data and methodologies and regression results.
Hint: the choice of variables in your regression should be supported by the literature
review in the previous section.
- A short conclusion.
The suggested word limit is 2000 words (references and appendices are not included in the
word count).
In the empirical section, you are asked to use the Macrohistory database. These data have a
much smaller number of countries but a much larger number of years per country. First of
all, familiarize yourself with the dataset and variables. All the relevant information is here:
https://www.macrohistory.net/database/ .
• After familiarizing with the dataset, select a subgroup of variables that you consider are
relevant to understand the drivers of countries’ GDP per-capita. To make this decision
use the models we used in lectures as a guide. However, you are free to think out of the
box and look for relevant relationships we have missed so far1. You can collect additional
data for your empirical section.
• Provide descriptive statistics on your variables (mean, median, standard deviation).
• Proceed to estimate the relationship between (log) GDP per-capita or GDP growth (your
choice) and the variables of interest that you selected. Start by estimating a simple OLS
regression with all the countries pooled together. Interpret the coefficients of the
regression and discuss econometric and economic issues behind the results. Can you
make sense of the results using any existing theory? Are your results consistent with
previous literature?
• Extend the previous analysis and estimate a panel fixed-effect regression to control for
countries’ unobserved heterogeneity that might shape the observed heterogeneity in

1 Relevant topics that are being investigated, and that might be of interest for you are the role of institutions,
public expenditure, the role of international trade, and the role of financial markets development, among
others.
GDP per-capita (growth)2. How different are the results compared to OLS? Are your
results consistent with previous literature?
• Using the panel fixed effect to investigate how the relationship between GDP per- capita
and your “X” variables have changed overtime. In particular, how different are the
results of the model when you restrict the sample before 1945 (regression using sample
1870-1945) and after 1945 (regression using sample 1946-2017)? Discuss your results
from an economic perspective, considering the major economic episodes during each
subperiod.
• Finally, investigate how important is the sample of countries in determining your results.
For example, do your results change substantially when excluding US or Australia or
Japan from the sample? Discuss potential explanations for your findings.

Submission Instructions
You must submit to Turnitin a final report (pdf file) for the research project, including graphs
and tables (when necessary). The report must contain a list of references used in the
analysis/discussion of results (in-text citation also required). Students also submit (to
Blackboard link instead) their replication data, log file and codes (You can use Stata or R or
any econometric software). The suggested format is 1.5 lines spacing, font size 12.
The submission is due by 4pm, 6th of May, 2022.



2 These slides are a useful source to refresh your knowledge on OLS and panel fixed-effect regression
https://ssrc.indiana.edu/doc/wimdocs/2011-10-07_mcmanus_panel_slides.pdf. This is relevant to understand
and interpret your results.