# **Appendix B:  Description of Explanatory Variables Used in Bayesian Model Averaging**

|**Variable**|**Source**|**Description / Adjustments**|
|---|---|---|
|Population<br>growth|WDI|Population growth in percentage points|
|Life expectancy|WDI|Life expectancyinyears|
|Financial depth;<br>M2 as % of GDP|WDI|Money and quasi-money (M2) as percent of GDP|
|Inflation rate|WDI|Inflation measure is calculated by taking annual log-differences from the WDI<br>reported GDP deflator(local currencyunits).|
|Budget balance|WEO and data<br>from Easterly,<br>Levine,<br>Roodman<br>(2004)|Data series on Budget Balance from Easterly, Levine, Roodman (2004) was used<br>when available, after last available year, used WEO data.|
|Revolution|Cross-National<br>Time Series|Banks, Arthur S., Wilson, Kenneth A. 2013. Cross-National Time-Series Data Archive.<br>Databanks International. Jerusalem, Israel; see<br>http://www.databanksinternational.com|
|Trade Openness|Wacziarg-<br>Welch (2008);<br>extended<br>through 2010.<br>http://www.a<br>nderson.ucla.e<br>du/faculty_pa<br>ges/romain.wa<br>cziarg/papersu<br>m.html|Wacziarg-Welch (2008) extension of the initial Sachs-Warner (1995) openness<br>measure is available through 2001. We update the series to 2010 using underlying<br>data on tariffs, black market premium and export marketing boards. A country is<br>considered as closed if it has one of the following: Average tariff rates over 40<br>percent, black market exchange rate over 20 percent lower than the official<br>exchange rate, or a state monopoly on major exports (export marketing board).<br>1. Tariffs: (Francis K.T. Ng “Trends in average applied tariff rates in developing and<br>industrial countries, 1980-2006”;http://go.worldbnka.org/LGOXFTV550). No<br>countries had tariffs beyond the 40 percent threshold at any time after 2000.<br>2. Black market premium: (Economic Freedom in the World 2012 report and<br>database from the Fraser Institute(http://www.freetheworld.com)). Data reports a<br>0-10 ranking where 10 implies no black market premium and 0 implies a premium<br>of 50 percent or more. The black market premium is defined as the percentage<br>difference between the official and the black market exchange rate. We assume<br>that a score of 0-6 implies a premium of 20 percent or greater.<br>3. Export marketing board: In 2001 Wacziarg-Welch identified 12 countries as<br>having an export marketing board based on various underlying data and sources.<br>Clemens et al. update the classification through 2005, identifying three further<br>countries has having liberalized or abolished their export marketing boards<br>(Senegal (2002), Chad and Papua New Guinea (2005)). In our update we assume<br>that none of the remaining 9 countries (Central African Rep, Congo Dem. Rep,<br>Congo Rep., Gabon, Russia, Togo, Ukraine) abolished or liberalized their export<br>marketing board through 2010. As neither of these countries have tariffs over 40<br>percent or black market premiums over 20 percent, they would be considered<br>“open” when liberalizingtheir export marketingboard.|
|Internal conflict;<br>war participation|UCDP-PRIO<br>Dataset|Data from UCDP dataset allows constructing one dummy for internal conflict and<br>one for war participation. In the latter, we consider a country to be participating in<br>a war only if it is listed either as the country of location, or a major participant (side<br>A or B),omittingcountries that are listed as allies.|
|Civil liberties,<br>political rights|Freedom<br>House|Sum of the civil liberties and the political rights indicator, both measured on a 1-7<br>scale.http://www.freedomhouse.org/report/freedom-world-2012/methodology|
|Financial<br>Openness|Chinn-Ito<br>Index|The Chinn-Ito index (_KAOPEN_) is an index measuring a country's degree of capital<br>account openness._KAOPEN_is based on the binarydummyvariables that codifythe|

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