Citation

Discussion Paper Details

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Title: Convergence, Endogenous Growth, and Productivity Disturbances

Author(s): Charles K Leung and Danny Quah

Publication Date: April 1996

Keyword(s): Cross-country Dependence, Cross-country Regression, Increasing Returns, Stochastic Growth and Time-series Regression

Programme Area(s): International Macroeconomics

Abstract: 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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Bibliographic Reference

Leung, C and Quah, D. 1996. 'Convergence, Endogenous Growth, and Productivity Disturbances'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1383