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CAN TRANSITION DYNAMICS EXPLAIN THE INTERNATIONAL OUTPUT DATA?
Published online by Cambridge University Press: 01 September 2004
Abstract
This paper studies the transition dynamics predictions of an R&D-based growth model, and evaluates their performance in explaining income disparities across nations. We find that the fraction of the observed cross-country income variation explained by the transitional dynamics of the model is as large as the one accounted for by existing steady-state level regressions. Our results suggest that the traditional view of a world in which nations move along their distinct balanced-growth paths is as likely as the one in which countries move along adjustment paths toward a common (very long run) steady state.
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- © 2004 Cambridge University Press
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