Income and Population Growth: A Simultaneous Equations Model
AbstractThis paper estimates a simultaneous equation model of income and population growth. The framework is based on the neoclassical growth model augmented with a population growth equation. Both limited and full information non-linear estimation methods are used, as well as different specification tests check the consistency of the model. The results show that the proposed simultaneity produces an important bias in the "typical" OLS income equation used in the empirical growth literature. The population growth parameter increases by almost 50\1/o (in absolute value) in the standard income equation. Finally, the paper shows that a cultural aspect like religion matters in the population growth equation, but not in the income equation.
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Bibliographic InfoPaper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 14.
Date of creation: Mar 1997
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