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The level and growth effects in the empirics of economic growth


  • Rao, B. Bhaskara
  • Gounder, Rukmini


Mankiw, Romer and Weil (1992) have extended the Solow (1956) model by augmenting the production function with human capital. Its empirical success is impressive and it showed a procedure to improve the explanatory power of the neoclassical growth model. This paper suggests an empirical procedure to further extend the neoclassical growth model to distinguish between the growth and level effects of shift variables like the human capital. We use time series data from Guatemala to show that while the growth effects of education are small, they are significant and dominate the level effects.

Suggested Citation

  • Rao, B. Bhaskara & Gounder, Rukmini, 2007. "The level and growth effects in the empirics of economic growth," MPRA Paper 1841, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:1841

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    Cited by:

    1. B. Bhaskara Rao, 2010. "Time-series econometrics of growth-models: a guide for applied economists," Applied Economics, Taylor & Francis Journals, vol. 42(1), pages 73-86.

    More about this item


    Solow Growth Model; Production Function; Shift Variables; Human Capital Level and Growth Effects;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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