The Revival of Scale Effects
AbstractScale effects in growth, positive effects of the population size on per capita output growth, have been rejected by cross-country regressions. This paper, however, finds that long-run time-series data supports the effects. Moreover, although scale effects in growth seem to be inconsistent with the fact that a substantial increase in the R&D labor in the postwar United States did not raise its growth rate, the theoretical part of this paper proposes costly international knowledge diffusion as its possible reason, suggesting that growth did not improve most likely because additional R&D labor was devoted to knowledge diffusion, rather than innovation. Calibration analysis shows that the key variables predicted by the model are not very different from their actual values in the postwar United States.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.
Volume (Year): 2 (2002)
Issue (Month): 1 (September)
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- Lutz Arnold, 2007. "A generalized multi-country endogenous growth model," International Economics and Economic Policy, Springer, vol. 4(1), pages 61-100, April.
- Sedgley, Norman & Elmslie, Bruce, 2010. "Reinterpreting the Jones critique: A time series approach to testing and understanding idea driven growth models with transitional dynamics," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 103-117, March.
- Mu, Qing & Lee, Keun, 2005. "Knowledge diffusion, market segmentation and technological catch-up: The case of the telecommunication industry in China," Research Policy, Elsevier, vol. 34(6), pages 759-783, August.
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