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Growth with Technical Change and Human Capital: Transition Dynamics Versus Steady State Predictions

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This paper studies the steady-state and transitional dynamics predictions of an R&D-based growth model and evaluates their performance in explaining income disparities across countries. We find that even though steady-state conditions di slightly better at predicting schooling enrollment and investment rates, transitional dynamics predictions, better fit the cross-country output per worker data. These results suggest that the traditional view of a world in which nations move along their distinct balanced-growth path is as likely as the one in which countries move along adjustment paths toward a common (very long-run) steady state. In addition, the model provides a reduced form empirical specification that incorporates capital input and R&D-effort measures. Therefore, we can compare the performance of the standard neoclassical growth model to that of an R&D-based growth model with human capital and imperfect competition, like ours. This stands in contrast to the prevalent view that reduced form regressions cannot discriminate between neoclassical and R&D-based growth frameworks.

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  • Fidel PÈrez Sebasti·n & Chris Papageorgiou, 1999. "Growth with Technical Change and Human Capital: Transition Dynamics Versus Steady State Predictions," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 9908, Departamento de Economía - Universidad Pública de Navarra.
  • Handle: RePEc:nav:ecupna:9908
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    JEL classification:

    • 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
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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