Growth and Convergence, 1950-2003: What Can We Learn from the Solow Model?

14 Pages Posted: 29 Nov 2008 Last revised: 11 Mar 2009

See all articles by Georgios Karras

Georgios Karras

University of Illinois at Chicago - Department of Economics

Date Written: November 26, 2008

Abstract

This paper shows that the Solow model's predictions are consistent with the data. The standard of living is correlated positively with saving rates and negatively with population growth rates, while just these two variables explain jointly 67% to 73% of the sample's cross-country variation. The empirical findings clearly reject absolute convergence in income per capita but are very strongly supportive of conditional convergence at an estimated average annual rate of 0.8% to 1.2% a year. It is also shown that the speed of convergence is far from constant over time: it has been mostly increasing during 1960-1990, but it has been falling since the early 1990s.

Keywords: Solow Model, Economic Growth, Convergence

JEL Classification: O40

Suggested Citation

Karras, Georgios, Growth and Convergence, 1950-2003: What Can We Learn from the Solow Model? (November 26, 2008). Applied Econometrics and International Development, Vol. 8, No. 1, 2008, Available at SSRN: https://ssrn.com/abstract=1307748

Georgios Karras (Contact Author)

University of Illinois at Chicago - Department of Economics ( email )

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HOME PAGE: http://www.uic.edu/~gkarras/

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