Solow (1956) as a model of cross-country growth dynamics

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Title: Solow (1956) as a model of cross-country growth dynamics
Authors: Whelan, Karl
McQuinn, Kieran
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Date: Feb-2007
Online since: 2008-06-12T13:57:30Z
Abstract: Despite the widespread popularity of the Solow growth model, much of the recent empirical work based on the classic framework misrepresents a crucial feature of the model. Namely, the growth rate of technological progress, assumed to be exogenous in the Solow model, is often identified as being constant across countries. This simplification of the behaviour of technological progress runs counter to the evidence and has had a number of significant implications for the interpretation of the Solow model. One implication has been an overemphasis on the role of factor accumulation in explaining cross-country income differentials. In addition, the commonly-cited empirical result that the speed of conditional convergence is slower than predicted by the Solow model is a function of this inaccurate assumption about technology rather than due to a failure of the model itself.
Type of material: Technical Report
Publisher: Central Bank of Ireland
Series/Report no.: Research Technical Paper; 1/RT/07
Copyright (published version): 2007 Copyright Central Bank of Ireland
Subject LCSH: Solow growth model
Convergence (Economics)
Industrial productivity
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Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Research Collection

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