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Is the Speed of Convergence a Good Proxy for the Transitional Growth Path?

This paper compares transitional dynamics in two alternative R&D non-scale growth models, one includes endogenous human capital, whereas the other does not. We show that focusing on the speed of convergence to discriminate between the two models can be misleading. Our analysis suggest that a better alternative to discriminate between different growth theories is studying the whole adjustment path predicted by them. In addition, we find that the introduction of human capital makes the speed of convergence predicted by the model much less sensitive to exogenous shocks. This last result offers theoretical support to the similar convergence speeds estimated by the literature in different samples.

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File URL: http://www.bus.lsu.edu/economics/papers/pap05_10.pdf
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Paper provided by Department of Economics, Louisiana State University in its series Departmental Working Papers with number 2005-10.

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Handle: RePEc:lsu:lsuwpp:2005-10
Contact details of provider: Postal: Baton Rouge, LA 70803-6306
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Web page: http://www.business.lsu.edu/economics
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  14. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
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  17. Ricardo J. Caballero & Adam B. Jaffe, 1993. "How High are the Giants' Shoulders: An Empirical Assessment of Knowledge Spillovers and Creative Destruction in a Model of Economic Growth," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 15-86 National Bureau of Economic Research, Inc.
  18. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
  19. Lloyd-Ellis, Huw & Roberts, Joanne, 2002. " Twin Engines of Growth: Skills and Technology as Equal Partners in Balanced Growth," Journal of Economic Growth, Springer, vol. 7(2), pages 87-115, June.
  20. Funke, Michael & Strulik, Holger, 2000. "On endogenous growth with physical capital, human capital and product variety," European Economic Review, Elsevier, vol. 44(3), pages 491-515, March.
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  22. Jordan Rappaport, 1999. "How does labor mobility affect income convergence?," Research Working Paper 99-12, Federal Reserve Bank of Kansas City.
  23. Keller, Wolfgang, 1996. "Absorptive capacity: On the creation and acquisition of technology in development," Journal of Development Economics, Elsevier, vol. 49(1), pages 199-227, April.
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