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The Endogeneity of the Natural Rate of Growth Author info | Abstract | Publisher info | Download info | Related research | Statistics Miguel A. León-Ledesma ()
A. P. Thirlwall ()
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The aim of this paper is to estimate the sensitivity of the natural rate of growth to the actual rate of growth for 15 OECD countries over the period 1961 to 1995, on the hypothesis that the natural rate of growth is not exogenously given. To do this we estimate the natural rate of growth and, then, how it changes when the actual growth rate is different from the natural rate. As a side test of the endogeneity hypothesis, we also test for the direction of causality between national output and factor inputs for the same set of countries. Our results support the idea that the natural rate of growth is responsive to the actual rate of growth and bring to the fore the importance of focusing on demand as well as supply for an understanding of growth rate differences between countries.
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Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number
9821.
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Date of creation: Nov 1998Date of revision:
Handle: RePEc:ukc:ukcedp:9821Contact details of provider: Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP Phone: +44 (0)1227 764000 Fax: +44 (0)1227 827850 Web page: http://www.ukc.ac.uk/economics/
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Keywords: Natural Rate of Growth ; Actual Rate of Growth ; Endogeneity ; Causality ; Inputs ; Output ; Other versions of this item:
Find related papers by JEL classification: O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
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