Discussion paper

DP2537 Nonlinear Dynamics, Spillovers and Growth in the G7 Economies: An Empirical Investigation

This paper proposes an empirical growth model which is consistent with a stochastic steady-state labour productivity level varying over time and across countries, where the disequilibrium mechanism leading to long-run equilibrium follows a nonlinear equilibrium correction model. Using data for the G7 economies during the postwar period since 1950, the empirical analysis yields a long-run model which implies plausible estimates of the production function parameters. Postwar economic growth in each of the G7 countries appears to be well characterized by a nonlinear equilibrium correction model where the dynamic adjustment towards long-run equilibrium is governed by a logistic function, while also capturing spillover effects in growth dynamics.

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Citation

Sarno, L (2000), “DP2537 Nonlinear Dynamics, Spillovers and Growth in the G7 Economies: An Empirical Investigation”, CEPR Press Discussion Paper No. 2537. https://cepr.org/publications/dp2537