Growth with Technical Change and Human Capital: Transition Dynamics Versus Steady State Predictions
AbstractThis paper studies the steady-state and transitional dynamics predictions of an R&D-based growth model and evaluates their performance in explaining income disparities across countries. We find that even though steady-state conditions di slightly better at predicting schooling enrollment and investment rates, transitional dynamics predictions, better fit the cross-country output per worker data. These results suggest that the traditional view of a world in which nations move along their distinct balanced-growth path is as likely as the one in which countries move along adjustment paths toward a common (very long-run) steady state. In addition, the model provides a reduced form empirical specification that incorporates capital input and R&D-effort measures. Therefore, we can compare the performance of the standard neoclassical growth model to that of an R&D-based growth model with human capital and imperfect competition, like ours. This stands in contrast to the prevalent view that reduced form regressions cannot discriminate between neoclassical and R&D-based growth frameworks.
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Bibliographic InfoPaper provided by Departamento de Economía - Universidad Pública de Navarra in its series Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra with number 9908.
Length: 34 pages
Date of creation: 1999
Date of revision:
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Other versions of this item:
- Fidel Perez & Chris Papageorgiou, 2000. "Growth With Technical Change And Human Capital: Transition Dynamics Versus Steady State Predictions," Computing in Economics and Finance 2000 213, Society for Computational Economics.
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-11-28 (All new papers)
- NEP-DEV-1999-11-28 (Development)
- NEP-INO-1999-11-28 (Innovation)
- NEP-TID-1999-12-14 (Technology & Industrial Dynamics)
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