To Study the Determinants of Growth Between the Countries of the World

Essay

To study the determinants of growth between the countries of the world, researchers have
used panels of countries and observations spanning over long periods of time (e.g.1965-
1975, 1975-1985, 1985-1990).Some of these studies have focused on the effect that
inflation has on growth and found that although the effect is small for a given time
period, it accumulates over time and therefore has an important negative effect.
(a)Explain why the OLS estimator may be biased in this case.