growth3 - Part IIB. Paper 2 Michaelmas Term 2010 Economic...

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Unformatted text preview: Part IIB. Paper 2 Michaelmas Term 2010 Economic Growth Lecture 3: Empirical Evidence for the Neo-Classical Model Dr Tiago Cavalcanti Readings and Refs Texts: Jones ch.3, (*) Articles: (*) Mankiw, Romer & Weil (1992) A contribution to the empirics of economic growth Quarterly Journal of Economics , 107 , 407-437. Sala-i-Martin (1996) The classical approach to convergence analysis Economic Journal , 106 , 1019-1036. Temple (1999) New growth evidence Journal of Economic Literature , 37 , 112-156. Empirical Evidence for/against Neoclassical Growth Model Contrast testable model predictions with data 1. Steady state levels 2. Convergence 3. Growth Regressions Remember: Solow-Swan Model Prediction: Capital per effective labour units converges monotonically to steady state * If ( ) then ( ) 0 k k k < < & % % % Also, growth rate decreasing in k % ( ) In ( ) ( ) is decreasing with from concavity of ( ) k k sf k g n g k k sf k k f k k = =- + + Proof : % & % % % % % % % % k k sf ~ ) ~ ( ( ) n g + + k k ~ ~ & k ~ * ~ k Transitional Dynamics Conditional Convergence Countries converge to steady state determined by parameters ( s , n , g , ) * k % Does model predict poorer countries grow faster ( absolute convergence )?...
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This note was uploaded on 06/04/2011 for the course ECONOMICS paper 2 taught by Professor Prado during the Spring '11 term at Cambridge.

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growth3 - Part IIB. Paper 2 Michaelmas Term 2010 Economic...

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