Income and factor substitution: an investigation on the Solow growth model under the constant elasticity of substitution

Alataş, Sedat

doi:10.1108/jes-07-2020-0335

Cited by 2 publications

(3 citation statements)

References 60 publications

(89 reference statements)

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“…According to the CES in (2), parameters 𝑣 and 𝜌 are needed to decide optimal specifications, Alatas conducted a study in elasticity of substitution (ES) to examine if the value differs across countries [31]. The work modified Solow's CES to derive the growth regressions with the first-order Taylor expansion and assess ES depicted by σ for each country group.…”

Section: Defining Producti Vitymentioning

confidence: 99%

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Simulated trial and error experiments on productivity

Thamprasert

Dawod

Chakpitak

2022

IJ-AI

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Trial and error experiments in socioeconomics were proved to be beneficial by Nobel prize laureates. However, replication is challenging and costly in term of time and money. The approach required interventions on human society, and moral issues have to be carefully considered in research designs. This work tried to make the approach more feasible by developing virtual economic environment to allow simulated trial and error experiments to take place. This research demonstrated the framework using 19 macroeconomic indicators in 6 interested categories to study the effect on productivity if each indicator value grew by 5 percent for each of 65 countries. Seven predictive models including some machine learning (ML) models were compared. Neural network dominated in accurateness and was selected as the core of the simulator. Experimented results are in full of surprises, and the framework acted as expected to be a data-driven guide toward country-specific policy making.

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Section: Defining Producti Vitymentioning

confidence: 99%

“…Alatas suggests σ=1.002 in group 1, σ=0.810 in group 2, σ=0.710 in group 3. We took the numbers as granted as well as the degree of homogeniety v=1 used in the work [31] to calculate our substitution parameter ρ. Noted that substitution parameter ρ could be calculated from the relation 𝜌 = 𝜎−1 𝜎 .…”

Section: Defining Producti Vitymentioning

confidence: 99%

Simulated trial and error experiments on productivity

Thamprasert

Dawod

Chakpitak

2022

IJ-AI

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“…The results confirm σ-convergence in income per capita. A recent study by Alataş (2020) identifies three convergence clubs based on income per worker for the period 1960–1995.…”

Section: Literature Reviewmentioning

confidence: 99%

Revisiting the Solow growth model: new empirical evidence on the convergence debate

Alataş

2021

JEAS

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PurposeThis paper investigates income convergence using different convergence concepts and methodologies for 72 countries over the period between 1960 and 2010.Design/methodology/approachThis study applies beta (β), sigma (s), stochastic and club convergence approaches. For β-convergence analysis, it derives the cross-country growth regressions of the Solow growth model under the basic and augmented Cobb–Douglass (CD) production functions and estimates them using cross-section and panel data estimators. While it employs both the widely used coefficient of variation and recently developed weak s-convergence approaches for s-convergence, it applies three different unit root tests for stochastic convergence. To test club convergence, it estimates the log-t regression.FindingsThe results reveal that (1) there exists conditional β-convergence, meaning that poorer countries grow faster than richer countries; (2) income per worker is not (weakly) s-converging, and cross-sectional variation does not tend to fall over the years; (3) stochastic convergence is not found and (4) countries in the sample do not converge to the unique equilibrium, and there exist five distinctive convergence clubs.Research limitations/implicationsThe results clearly show that heavily relying on one of the convergence techniques might lead researchers to obtain misleading results regarding the existence of convergence. Therefore, to draw reliable inferences, the results should be checked using different convergence concepts and methodologies.Originality/valueContrary to the previous literature, which is generally restricted to testing the existence of absolute and conditional β-convergence between countries, to the best of the author’s knowledge, this is the first study to consider and compare all originally and recently developed fundamental concepts of convergence altogether. Besides, it uses the Penn World Table (PWT) 9.1 and extends the period to 2010. From this point of view, this study is believed to provide the most up-to-date empirical evidence.

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Income and factor substitution: an investigation on the Solow growth model under the constant elasticity of substitution

Cited by 2 publications

References 60 publications

Simulated trial and error experiments on productivity

Simulated trial and error experiments on productivity

Revisiting the Solow growth model: new empirical evidence on the convergence debate

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