Global Divergence in Growth Regressions

55 Pages Posted: 16 Oct 2013

See all articles by Michele Battisti

Michele Battisti

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Gianfranco Di Vaio

LUISS Guido Carli University; University of Perugia - Department of Economics

Joseph Zeira

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); LUISS Guido Carli, DPTEA

Date Written: October 2013

Abstract

This paper extends the standard growth regression model by adding an assumption that a country follows the global technology frontier either fully or partially. This additional assumption changes significantly the growth regression model and its results in three main ways. First, it shows that although a country converges to its long-run growth path, this path can diverge from the countries at the global frontier. We measure the degree of divergence for each country and find that most indeed diverge from the frontier. Second, we estimate growth dynamics without controlling for additional variables. Third, our new method enables us to disentangle the effects of the explanatory variables on the long-run rate of growth from the short-run effects.

Keywords: Convergence, Divergence, Economic Growth, Global Frontier, Growth Regressions

JEL Classification: O40, O47, O57

Suggested Citation

Battisti, Michele and Di Vaio, Gianfranco and Zeira, Joseph, Global Divergence in Growth Regressions (October 2013). CEPR Discussion Paper No. DP9687. Available at SSRN: https://ssrn.com/abstract=2341050

Michele Battisti (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Gianfranco Di Vaio

LUISS Guido Carli University ( email )

viale Pola 12
Roma, Roma 00198
Italy

University of Perugia - Department of Economics ( email )

via Pascoli, 20
PG 06123 Perugia, 06123
Italy

Joseph Zeira

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem 91905, IL Jerusalem 91905
Israel
+972 2 588 3256 (Phone)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

LUISS Guido Carli, DPTEA ( email )

viale Pola 12
Roma, Roma 00198
Italy

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