Estimates from a log-linear regression model

[Maartenvb]

Hello all,

I am estimating a economic growth regressions using dynamic panel data.
My specification is as folllows:

Ln(Y_i,t) = a*Ln(Y_i,t-1) + b*X_i,t + e_i,t

- Y measures income per capita
- X is the independent variable of interest, which represents a certain share of GDP (e.g. 0.05)

From the specification it follows that I am estimating the effect on economic growth as well:

Ln(Y_i,t) - Ln (Y_i,t-1) = (a - 1)*Ln(Y_i,t-1) + b*X_i,t + e_i,t

After running the model, the estimate for b is 0.07. Can someone help me interpret this estimate? I would like to know what the change in growth rate is following from this 0.07.


Thanks in advance!

Maarten