Abstract
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.
Original language | English (US) |
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Pages (from-to) | 525-557 |
Number of pages | 33 |
Journal | Journal of Monetary Economics |
Volume | 33 |
Issue number | 3 |
DOIs | |
State | Published - Jun 1994 |
Keywords
- Economic development
- Economic growth
ASJC Scopus subject areas
- Finance
- Economics and Econometrics