Multiple regimes and cross-country growth behaviour
Version of Record online: 7 NOV 2006
Copyright © 1995 John Wiley & Sons, Ltd.
Journal of Applied Econometrics
Volume 10, Issue 4, pages 365–384, October/December 1995
How to Cite
Durlauf, S. N. and Johnson, P. A. (1995), Multiple regimes and cross-country growth behaviour. J. Appl. Econ., 10: 365–384. doi: 10.1002/jae.3950100404
- Issue online: 7 NOV 2006
- Version of Record online: 7 NOV 2006
- Manuscript Revised: DEC 1994
- Manuscript Received: MAR 1993
This paper provides some new evidence on the behaviour of cross-country growth rates. We reject the linear model commonly used to study cross-country growth behaviour in favour of a multiple regime alternative in which different economies obey different linear models when grouped according to initial conditions. Further, the marginal product of capital is shown to vary with the level of economic development. These results are consistent with growth models which exhibit multiple steady states. Our results call into question inferences that have been made in favour of the convergence hypothesis and further suggest that the explanatory power of the Solow growth model may be enhanced with a theory of aggregate production function differences.