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Is the Speed of Convergence a Good Proxy for the Transitional Growth Path?

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Author Info
Chris Papageorgiou ()
Fidel Perez-Sebastian ()

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Abstract

This paper compares transitional dynamics in two alternative R&D non-scale growth models, one includes endogenous human capital, whereas the other does not. We show that focusing on the speed of convergence to discriminate between the two models can be misleading. Our analysis suggest that a better alternative to discriminate between different growth theories is studying the whole adjustment path predicted by them. In addition, we find that the introduction of human capital makes the speed of convergence predicted by the model much less sensitive to exogenous shocks. This last result offers theoretical support to the similar convergence speeds estimated by the literature in different samples.

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Paper provided by Department of Economics, Louisiana State University in its series Departmental Working Papers with number 2005-10.

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Handle: RePEc:lsu:lsuwpp:2005-10

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