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 language||English (US)|
|Number of pages||49|
|Journal||Carnegie-Rochester Confer. Series on Public Policy|
|State||Published - Dec 1995|