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Prometheus Bound: Polarization Is Possible In The Neoclassical Growth Model

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  • Efthymios G. Tsionas
  • Loukas Theocharis

Abstract

The paper demonstrates that the standard neoclassical model of stochastic growth in the absence of any other modifications is consistent with club convergence contrary to the analysis in Cetorelli (2002, Journal of Economic Dynamics and Control, 27, pp. 29–50). In that sense, it is not necessary to augment the model with a probability of adverse shocks that is inversely related to aggregate capital stock or provide other modifications.

Suggested Citation

  • Efthymios G. Tsionas & Loukas Theocharis, 2008. "Prometheus Bound: Polarization Is Possible In The Neoclassical Growth Model," Metroeconomica, Wiley Blackwell, vol. 59(2), pages 203-211, May.
    • Handle: RePEc:bla:metroe:v:59:y:2008:i:2:p:203-211
    DOI: 10.1111/j.1467-999X.2008.00300.x
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    References listed on IDEAS

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    1. Quah, Danny T, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," Economic Journal, Royal Economic Society, vol. 106(437), pages 1045-1055, July.
    2. Acemoglu, Daron & Zilibotti, Fabrizio, 1997. "Was Prometheus Unbound by Chance? Risk, Diversification, and Growth," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 709-751, August.
    3. Quah, D., 1990. "Galton'S Fallacy And The Tests Of The Convergence Hypothesis," Working papers 552, Massachusetts Institute of Technology (MIT), Department of Economics.
    4. Quah, Danny, 1996. "Twin peaks : growth and convergence in models of distribution dynamics," LSE Research Online Documents on Economics 2278, London School of Economics and Political Science, LSE Library.
    5. Cetorelli, Nicola, 2002. "Could Prometheus be bound again? A contribution to the convergence controversy," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 29-50, November.
    6. Quah, Danny T., 1996. "Empirics for economic growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1353-1375, June.
    7. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
    8. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
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