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Solow (1956) as a model of cross-country growth dynamics
Whelan, Karl; McQuinn, Kieran
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.
Keyword(s): Solow growth model; Convergence (Economics); Industrial productivity
Publication Date:
2008
Type: Other
Peer-Reviewed: Unknown
Language(s): English
Institution: University College Dublin
Publisher(s): Central Bank of Ireland
File Format(s): other; application/pdf
First Indexed: 2012-08-25 05:25:02 Last Updated: 2018-10-11 16:39:58