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The Poverty of Linear Nations: Lessons from Taking an AK Model to the Data

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Author Info
João Ejarque (University of Copenhagen Institute of Economics)
Ana Balcão Reis (Faculdade de Economia, Universidade Nova de Lisboa)

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Abstract

This paper takes an AK model to the PWT data. In the model, intratemporal and intertemporal shocks are reduced forms for different technologies, and determine the variation of the growth rate. Using the policy functions of the model we recover time series for the unobserved technology shock for a panel of countries. We can then evaluate both how well the model fits the data and what the contribution of the different shocks to the variation of growth rates is. We find that the data is largely inconsistent with the AK structure. However, we isolate what we believe are pervasive patterns in macroeconomic models: a negative correlation between intra and intertemporal shocks, and an ever increasing level of technology matched with ever cheaper consumption relative to investment.

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Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 03-06.

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Length: 41 pages
Date of creation: Apr 2003
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Handle: RePEc:kud:kuiedp:0306

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Related research
Keywords: endogenous growth; technology shocks; investment shocks;

Find related papers by JEL classification:
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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