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Convergence behaviour in exogenous growth models

Author

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  • Jochonia S Mathunjwa
  • Jonathan Temple

Abstract

This paper analyzes several aspects of convergence behaviour in the Solow growth model. In empirical work, a popular approach is to log-linearize around the steady-state. We investigate the conditions under which this approximation performs well, and discuss convergence behaviour when an economy is some distance from the steady-state. A formal analysis shows that convergence speeds will be heterogeneous across countries and over time. In particular, the Solow model implies that convergence to a growth path from above is slower than convergence from below. We find some support for this prediction in the data.

Suggested Citation

  • Jochonia S Mathunjwa & Jonathan Temple, 2006. "Convergence behaviour in exogenous growth models," Bristol Economics Discussion Papers 06/590, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:06/590
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    References listed on IDEAS

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    Cited by:

    1. Giovanni Caggiano & Leone Leonida, 2009. "International output convergence: evidence from an autocorrelation function approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(1), pages 139-162.
    2. Christopoulos Dimitris K & Leon-Ledesma Miguel A., 2011. "International Output Convergence, Breaks, and Asymmetric Adjustment," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 15(3), pages 1-33, May.
    3. Dedák, István, 2022. "Bérfelzárkózás Magyarországon - fikció vagy valóság? [Wage catch-up in Hungary: myth or reality?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 425-450.
    4. Dedák, István & Dombi, Ákos, 2009. "Konvergencia és növekedési ütem [Convergence and growth rate]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 19-45.
    5. Jesús Crespo Cuaresma & Martin Feldkircher, 2013. "Spatial Filtering, Model Uncertainty And The Speed Of Income Convergence In Europe," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(4), pages 720-741, June.

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    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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