Kieran McQuinn
Karl Whelan



stochastic convergence economics steady state speed technology behaviour solow growth model capital productivity

Conditional convergence revisited : taking Solow very seriously (2006)

Abstract Output per worker can be expressed as a function of technological efficiency and of the capital-output ratio. Because technology is exogenous in the Solow model, all of the endogenous convergence dynamics take place through the adjustment of the capital-output ratio. This paper uses the empirical behaviour of the capital-output ratio to estimate the speed of conditional convergence of economies towards their steady-state paths. We find that the conditional convergence speed is about seven percent per year. This is somewhat faster than predicted by the Solow model and is significantly higher than reported in most previous studies based on output per worker regressions. We show that, once there are stochastic shocks to technology, standard panel econometric techniques produce downward-biased estimates of convergence speeds, while our approach does not.
Collections Ireland -> University College Dublin -> School of Economics
Ireland -> University College Dublin -> College of Social Sciences and Law
Ireland -> University College Dublin -> Economics Research Collection

Full list of authors on original publication

Kieran McQuinn, Karl Whelan

Experts in our system

Kieran McQuinn
University College Dublin
Total Publications: 5
Karl Whelan
University College Dublin
Total Publications: 69