From Which Side to the Steady State of the Augmented Solow Model? The Role of Country-Specific Total Factor Productivity Growth Rates
AbstractThe human capital-augmented Solow model (Mankiw et al., 1992) has been criticized by Cho and Graham (1996) by stating that half of all countries converge to their steady state from above, i.e. from income levels above those obtained in their steady state. This is clearly at odds with the general idea that countries approach their steady state from a backward position. In this paper we will argue that this result is primarily due to the assumption of an identical exogenous rate of technological progress for all countries. Once different rates of technological progress are introduced into the model, the number of countries approaching their steady state from above is reduced to a number more in line with what the augmented Solow model would predict. However, for a sample consisting of 98 non-oil countries, the assumption of constant returns to scale has to be rejected. For the non-oil sample our analysis thus both supports and challenges the human capital-augmented Solow model. For a more limited sample consisting of 22 OECD countries, the results clearly support the augmented Solow model by both reducing the number of countries converging from above their steady state to zero and by accepting the assumption of constant returns to scale.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology in its series Research Memoranda with number 003.
Date of creation: 1999
Date of revision:
Contact details of provider:
Web page: http://www.maastrichtuniversity.nl/web/UMPublications.htm
mathematical economics and econometrics ;
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-05-17 (All new papers)
- NEP-DEV-1999-05-17 (Development)
- NEP-DGE-1999-05-17 (Dynamic General Equilibrium)
- NEP-TID-1999-05-17 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Edmond S. Phelps, 1964. "Models of Technical Progress and the Golden Rule of Research," Cowles Foundation Discussion Papers 176, Cowles Foundation for Research in Economics, Yale University.
- Morrison, Catherine J, 1992. "Unraveling the Productivity Growth Slowdown in the United States, Canada and Japan: The Effects of Subequilibrium, Scale Economies and Markups," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 381-93, August.
- Griliches, Zvi, 1980.
"R & D and the Productivity Slowdown,"
American Economic Review,
American Economic Association, vol. 70(2), pages 343-48, May.
- Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-84, August.
- Cho, Dongchul & Graham, Stephen, 1996. "The other side of conditional convergence," Economics Letters, Elsevier, vol. 50(2), pages 285-290, February.
- N. Gregory Mankiw & David Romer & David N. Weil, 1992.
"A Contribution to the Empirics of Economic Growth,"
NBER Working Papers
3541, National Bureau of Economic Research, Inc.
- Weel,Bas,ter, 1999. "Investing in Knowledge: On the Trade-Off between R&D, ICT, Skills and Migration," Research Memoranda 024, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology.
- Ziesemer,Thomsas, 2003. "Multiple-steady-state growth models explaining twin-peak empirics?," Research Memoranda 033, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Charles Bollen).
If references are entirely missing, you can add them using this form.