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On the Mechanics of Economic Convergence

Author

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  • Steger Thomas M.

    (ETH Zürich,Zürich, Switzerland)

Abstract

The speed at which an economy converges to its steady state is investigated by using a general non-scale R&D-based growth model. To accomplish this task, an analytical decomposition formula for the instantaneous rate of convergence is developed. By applying this decomposition to the model under study, the driving forces behind the convergence process are identified. Two convergence mechanisms are distinguished: the accumulation-decumulation mechanism and the resource-reallocation mechanism. The relative importance of the different convergence mechanisms is assessed using numerical techniques. Moreover, it is shown that the specific shock being considered might be crucial for the instantaneous rate of convergence.

Suggested Citation

  • Steger Thomas M., 2006. "On the Mechanics of Economic Convergence," German Economic Review, De Gruyter, vol. 7(3), pages 317-337, August.
    • Handle: RePEc:bpj:germec:v:7:y:2006:i:3:p:317-337
    DOI: 10.1111/j.1468-0475.2006.00158.x
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    Cited by:

    1. is not listed on IDEAS
    2. Simone Valente, 2005. "Genuine dissaving and optimal growth," CER-ETH Economics working paper series 05/38, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    3. Simone Valente, 2006. "Trade, Envy and Growth: International Status Seeking in a Two-Country World," CER-ETH Economics working paper series 06/53, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    4. Corrado Di Maria & Simone Valente, 2006. "The Direction of Technical Change in Capital-Resource Economies," CER-ETH Economics working paper series 06/50, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    5. Valente, Simone, 2008. "Intergenerational transfers, lifetime welfare, and resource preservation," Environment and Development Economics, Cambridge University Press, vol. 13(1), pages 53-78, February.

    More about this item

    Keywords

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    JEL classification:

    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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