Transcription of A Contribution to the Empirics of Economic Growth
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A Contribution to the Empirics of Economic Growth
A Contribution TO THE Empirics OF Economic Growth * N. GREGORY MANKIW DAVID ROMER DAVID N. WEIL This paper examines whether the Solow Growth model is consistent with the international variation in the standard of living. It shows that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data. The paper also examines the implications of the Solow model for convergence in standards of living, that is, for whether poor countries tend to grow faster than rich countries. The evidence indicates that, holding population Growth and capital accumulation constant, countries converge at about the rate the augmented Solow model predicts. INTRODUCTION This paper takes Robert Solow seriously. In his classic 1956 article Solow proposed that we begin the study of Economic Growth by assuming a standard neoclassical production function with decreasing returns to capital.
THE EMPIRICS OF ECONOMIC GROWTH 411 but resource endowments, climate, institutions, and so on; it may therefore differ across countries. We assume that lnA(O) = a + E, where a is a constant and E is a country-specific shock. Thus, log income per capita at a given time-time 0 for simplicity-is (7) In a+ In(s)- In(n+g+8)+E.
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