On growth and indeterminacy: some theory and evidence

Jess Benhabib, Jordi Gali

    Research output: Contribution to journalArticle

    Abstract

    We overview some recent models of growth with multiple equilibria. Those models offer a potential explanation for differences in income levels across economies which stands as an alternative to theories that rely exclusively on differences in fundamentals and/or initial conditions. We discuss some of the empirical predictions generated by those models vis à vis the predictions of their deterministic counterparts. Using an approach that makes use of physical and human capital data for a cross-section of countries we show that some of the predictions of growth models with unique equilibria are hard to reconcile with the evidence.

    Original languageEnglish (US)
    Pages (from-to)163-211
    Number of pages49
    JournalCarnegie-Rochester Confer. Series on Public Policy
    Volume43
    Issue numberC
    DOIs
    StatePublished - Dec 1995

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