Pair-Wise Cointegration in Long-Run Growth Models
23 Pages Posted: 9 Feb 2007
Date Written: February 9, 2007
This paper presents a novel theoretical and empirical approach to the analysis of long-run economic growth. It shows that most traditional theoretical models share the feature of pair-wise cointegration among the main variables. An augmented Kaldor model is proposed in contrast to the standard production function. The empirical analysis employs non-stationary panel techniques on two groups of countries to show that pair-wise cointegration exists among GDP, physical capital, human capital, and trade openness.
Keywords: Growth, cointegration, human capital, investment, openness
JEL Classification: O, C2
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