A Panel Granger-Causality Test of Endogenous vs. Exogenous Growth

KOF Working Paper No. 231

34 Pages Posted: 20 Jul 2009

See all articles by Jochen Hartwig

Jochen Hartwig

ETH Zurich - Swiss Economic Institute

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

Hartwig, Jochen, A Panel Granger-Causality Test of Endogenous vs. Exogenous Growth (July 2009). KOF Working Paper No. 231, Available at SSRN: https://ssrn.com/abstract=1436383 or http://dx.doi.org/10.2139/ssrn.1436383

Jochen Hartwig (Contact Author)

ETH Zurich - Swiss Economic Institute ( email )

CH-8092 Zurich
Switzerland