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Is Growth Exogenous? Taking Mankiw, Romer and Weil Seriously

56 Pages Posted: 9 Jul 2001  

Ben S. Bernanke

Board of Governors of the Federal Reserve System

Refet S. Gurkaynak

Bilkent University - Department of Economics

Date Written: July 2001

Abstract

Is long-run economic growth exogenous? To address this question, we show that the empirical framework of Mankiw, Romer, and Weil (1992) can be extended to test any growth model that admits a balanced growth path; and we use that framework both to revisit variants of the Solow growth model and to evaluate simple alternative models of endogenous growth. To allow for the possibility that economies in our sample are not on their balanced growth paths, we also study the cross-sectional behavior of TFP growth, which we estimate using alternative measures of labor's share. Our broad conclusion, based on both model estimation and growth accounting, is that long-run growth is significantly correlated with behavioral variables such as the savings rate, and that this correlation is not easily explained by models in which growth is treated as the exogenous variable. Hence, future empirical studies should focus on models that exhibit endogenous growth.

Suggested Citation

Bernanke, Ben S. and Gurkaynak, Refet S., Is Growth Exogenous? Taking Mankiw, Romer and Weil Seriously (July 2001). NBER Working Paper No. w8365. Available at SSRN: https://ssrn.com/abstract=275995

Ben S. Bernanke (Contact Author)

Board of Governors of the Federal Reserve System

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Refet S. Gurkaynak

Bilkent University - Department of Economics ( email )

06533 Ankara
Turkey

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