Solow vs. Solow: Machine Prices and Development

30 Pages Posted: 10 Jul 2000 Last revised: 18 Jul 2022

See all articles by Boyan Jovanovic

Boyan Jovanovic

New York University - Department of Economics

Rafael Rob

University of Pennsylvania - Department of Economics

Date Written: January 1997

Abstract

Machines are more expensive in poor countries, and the relation is pronounced. It is hard for a Solow (1956) type of model to explain the relation between machine prices and GDP given that in most countries equipment investment is under 10% of GDP. A stronger relation emerges in a Solow (1959) type of vintage model in which technology is embodied in machines.

Suggested Citation

Jovanovic, Boyan and Rob, Rafael, Solow vs. Solow: Machine Prices and Development (January 1997). NBER Working Paper No. w5871, Available at SSRN: https://ssrn.com/abstract=225655

Boyan Jovanovic (Contact Author)

New York University - Department of Economics ( email )

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Rafael Rob

University of Pennsylvania - Department of Economics ( email )

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