History or path dependence in mixed-Poisson growth: Brazil, 1822-2000, and USA, 1869-1996, with an estimate of the world mixing distribution at start-up
AbstractThe growth empirics of two separate but related issues are studied. In the first, the annual data on GDP per person (GDPpp) for Brazil, 1822-2000, and the US, 1869-1996, were converted into arrival times for innovations defined as permanent increments to GDPpp of given size (e.g. 3%). We say an economy exhibits history dependence if its arrival times can be shown to come from a homogenous Poisson process, that is, with a constant mean arrival rate of innovations (the Poisson parameter, λ). Brazil’s growth trajectory since 1822 is shown not to be history dependent in this sense, though both its truncated series, 1889-2000, and the US, 1869-1996, passed the tests. Brazil’s stagnation in the mid to late 19th century, when coupled to its growth spurt in the 20th, is the suggested reason for the failure. The second study uses the Summers-Heston data for 134 economies in 2000 to estimate a discrete, theoretical distribution for the λ at start-up in 1800, based on the (unproved) assumption that each economy drew an arrival rate from this “mixing” distribution and stayed with it. The results show that if innovations are assumed to be big, rare events, then the world mixing distribution will be skewed, and all the λ drawn at start-up will be almost equal and thus the dispersion of incomes across nations 200 years later will then be due only to random variations along paths generated by the same homogenous Poisson process.
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Bibliographic InfoPaper provided by Departamento de Economia da Universidade de Brasilia in its series Working papers - Textos para Discussao do Departamento de Economia da Universidade de Brasilia with number 332.
Length: 37 pages
Date of creation: Nov 2010
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stochastic growth; mixed Poisson processes; statistical tests;
Find related papers by JEL classification:
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
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