Convergence behaviour in exogenous growth models
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.
|Date of creation:||Aug 2006|
|Contact details of provider:|| Postal: Priory Road Complex, Priory Road, Bristol, BS8 1TU|
Phone: 0117 928 8415
Fax: 0117 928 8577
Web page: http://www.efm.bris.ac.uk/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carlin, Wendy & Soskice, David, 2005. "Macroeconomics: Imperfections, Institutions, and Policies," OUP Catalogue, Oxford University Press, number 9780198776222.
- Sala-i-Martin, Xavier X, 1996.
"The Classical Approach to Convergence Analysis,"
Royal Economic Society, vol. 106(437), pages 1019-1036, July.
- Sala-i-Martin, Xavier, 1995. "The Classical Approach to Convergence Analysis," CEPR Discussion Papers 1254, C.E.P.R. Discussion Papers.
- Sala-i-martin, X., 1995. "The Classical Approach to Convergence Analysis," Papers 734, Yale - Economic Growth Center.
- Xavier Sala-i-Martin, 1995. "The classical approach to convergence analysis," Economics Working Papers 117, Department of Economics and Business, Universitat Pompeu Fabra.
- Okada Toshihiro, 2006. "What Does the Solow Model Tell Us about Economic Growth?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-30, April.
- Baumol, William J & Wolff, Edward N, 1988. "Productivity Growth, Convergence, and Welfare: Reply," American Economic Review, American Economic Association, vol. 78(5), pages 1155-1159, December.
- Williams, R. L. & Crouch, R. L., 1972. "The adjustment speed of neoclassical growth models," Journal of Economic Theory, Elsevier, vol. 4(3), pages 552-556, June.
- Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
- Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
- Robert J. Barro, 1989. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
- Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-1085, December.
- Baumol, William J., 1985. "Productivity Growth, Convergence and Welfare: What the Long Run Data Show," Working Papers 85-27, C.V. Starr Center for Applied Economics, New York University.
- N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.