A Panel Granger-Causality Test of Endogenous vs. Exogenous Growth
KOF Working Paper No. 231
34 Pages Posted: 20 Jul 2009
Date Written: July 2009
Abstract
The paper proposes a new test of endogenous vs. exogenous growth theories based on the Granger-causality methodology and applies it to a panel of 20 OECD countries. The test yields divergent evidence with respect to physical and human capital. For physical capital, the test results favor Solow-type exogenous growth theory over AK-type endogenous growth models. On the other hand, the test results lend support to human capital oriented endogenous growth models - like the Uzawa-Lucas model - rather than to the human capital augmented Solow model.
Keywords: Exogenous growth, endogenous growth, panel Granger-causality tests
JEL Classification: C12, C23, O41
Suggested Citation: Suggested Citation
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