The endogeneity of the natural rate of growth – an empirical study for Latin‐American countries

The aim of this paper is to analyse the sensitivity of the natural rate of growth to the actual rate of growth for a sample of 11 Latin‐American countries, assuming the natural rate to be determined endogenously by changes in the actual rate of growth. The natural rates of growth are estimated in a system of SUR estimations over the period 1986–2003. In order to determine whether they react endogenously to changes in the actual rate of growth, a dummy variable for boom periods is added to the system of regressions. The results confirm the hypothesis about the endogeneity of the natural rate of growth.natural rate of growth, actual rate of growth, endogeneity, Latin America, seemingly unrelated regressions, O40, E10, C23,