This paper shows that the Solow model’s predictions are consistent with the data. The standard of living is correlated positively with saving rates and negatively with population growth rates, while just these two variables explain jointly 67% to 73% of the sample’s cross-country variation. The empirical findings clearly reject absolute convergence in income per capita but are very strongly supportive of conditional convergence at an estimated average annual rate of 0.8% to 1.2% a year. It is also shown that the speed of convergence is far from constant over time: it has been mostly increasing during 1960-1990, but it has been falling since the early 1990s.
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Find related papers by JEL classification: O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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William A. Brock & M. Scott Taylor, 2004.
"The Green Solow Model,"
NBER Working Papers
10557, National Bureau of Economic Research, Inc.
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