Estimates Of Technology And Convergence: Simulation Results
AbstractUsing a Solow-Swan model with a stochastic saving rate and stochastic productivity we analyse the distributions of parameter estimates that emerge under various choices of technology, and of the dimension of the panel on which cross-section regressions are based. There are distinct asymmetries that characterize these distributions. These asymmetries become more pronounced when the effects of a near-unit root in the productivity shock become magnified over a longer time horizon and when the underlying production function is not Cobb-Douglas. Consequently, relying on traditional econometric transformations of these parameter estimates based on symmetric distributions, such as t-ratios, will be quite misleading if one tries to assess technology parameters and b-convergence.
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Bibliographic InfoPaper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2006-07.
Length: 18 pages
Date of creation: Jan 2006
Date of revision:
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Other versions of this item:
- Graeme Wells & Thanasis Stengos, 2010. "Estimates of Technology and Convergence: Simulation Results," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 13(2-1), pages 97-108, Winter-Su.
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
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