TY - JOUR
T1 - Economic stagnation, fixed factors, and policy thresholds
AU - Easterly, William
PY - 1994/6
Y1 - 1994/6
N2 - An endogenous growth model with fixed factors predicts that countries will stagnate if policies pass a threshold; initial income does not affect whether a country stagnates. For growing countries, the model has transitional dynamics where growth first accelerates and then decelerates as income rises. The data confirm these predictions: a probit equation predicts well whether countries stagnate as a function of policies but not of income, a truncated regression for growing countries shows a 'hump-shaped' relation between initial income and subsequent growth and equality of coefficients on income and other variables between the stagnation and growth regimes is rejected.
AB - An endogenous growth model with fixed factors predicts that countries will stagnate if policies pass a threshold; initial income does not affect whether a country stagnates. For growing countries, the model has transitional dynamics where growth first accelerates and then decelerates as income rises. The data confirm these predictions: a probit equation predicts well whether countries stagnate as a function of policies but not of income, a truncated regression for growing countries shows a 'hump-shaped' relation between initial income and subsequent growth and equality of coefficients on income and other variables between the stagnation and growth regimes is rejected.
KW - Economic development
KW - Economic growth
UR - http://www.scopus.com/inward/record.url?scp=0001577399&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0001577399&partnerID=8YFLogxK
U2 - 10.1016/0304-3932(94)90042-6
DO - 10.1016/0304-3932(94)90042-6
M3 - Article
AN - SCOPUS:0001577399
VL - 33
SP - 525
EP - 557
JO - Carnegie-Rochester Confer. Series on Public Policy
JF - Carnegie-Rochester Confer. Series on Public Policy
SN - 0304-3932
IS - 3
ER -