Discussion paper

DP1383 Convergence, Endogenous Growth, and Productivity Disturbances

Kelly (1992) has recently shown that evidence on convergence cannot be taken as evidence against endogenous growth in general. This study uses a well-known class of stochastic growth models to show other difficulties with traditional empirical studies of convergence. Key parameters typically cannot be estimated consistently in cross-section regressions. When the parameters are assumed known, implications for convergence are unavailable except under restrictive and economically unmotivated assumptions. Those same assumptions that relate key parameters to cross-country convergence render cross-section regressions impossible to estimate consistently.

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Citation

Quah, D and C Leung (1996), ‘DP1383 Convergence, Endogenous Growth, and Productivity Disturbances‘, CEPR Discussion Paper No. 1383. CEPR Press, Paris & London. https://cepr.org/publications/dp1383