The Solow model with CES technology: nonlinearities and parameter heterogeneity

Masanjala, Winford H.; Papageorgiou, Chris

doi:10.1002/jae.722

Cited by 121 publications

(86 citation statements)

References 34 publications

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“…By employing a CES production function, we depart from earlier work by allowing the elasticity of substitution to differ from one. CES production functions are becoming increasingly popular in the empirical literature on international growth and convergence (Masanjala and Papageorgiou (2004), Duffy and Papageorgiou (2000)). They are attractive in this context because they allow us to investigate the role of the elasticity of substitution in the growth process and because they encompass the CD specification.…”

Section: Literature and Theoretical Frameworkmentioning

confidence: 99%

“…Following Masanjala and Papageorgiou (2004) we specify the following CES production function with labor augmenting technological progress:…”

Section: Literature and Theoretical Frameworkmentioning

confidence: 99%

“…The added flexibility of the CES production function allows us to investigate the role of the elasticity of substitution in growth. As Klump and Preissler (2000) show analytically, and Masanjala and Papageorgiou (2004), Duffy and Papageorgiou (2000) show empirically using an international data set, the elasticity of substitution can play in important role in the growth process.…”

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confidence: 96%

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Determinants of Income Growth in Metropolitan and Nonmetropolitan Labor Markets

Hammond

Thompson

2008

American J Agri Economics

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This article analyzes determinants of growth across labor markets in the United States, using a production function approach based on four inputs: labor, manufacturing investment, human capital investment, and public capital investment. We find little role for public capital investment in growth, but that manufacturing investment spurred growth in nonmetropolitan areas, in contrast to metropolitan areas. We also find that human capital investment mattered more for metropolitan areas than for nonmetropolitan areas. Further, the presence of more colleges and universities, more household amenities, and lower tax rates are all found to have encouraged human capital accumulation in U.S. labor markets. Copyright 2008, Oxford University Press.

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Section: Literature and Theoretical Frameworkmentioning

confidence: 99%

“…Following Masanjala and Papageorgiou (2004) we specify the following CES production function with labor augmenting technological progress:…”

Section: Literature and Theoretical Frameworkmentioning

confidence: 99%

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confidence: 96%

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Determinants of Income Growth in Metropolitan and Nonmetropolitan Labor Markets

Hammond

Thompson

2008

American J Agri Economics

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“…Many researchers, including Bernard and Jones (1996), Durlauf and Johnson (1995), Caselli, Esquivel and Lefort (1996), Lee, Pesaran andSmith (1997, 1998) and Masanjala and Papageorgiou (2004) have noted that, empirically, capital factors shares appear to vary considerably across countries. For example Durlauf and Johnson (1995) employ a regression tree analysis to show that a cross sectional regression of the Summers and Heston data appears to provide support for several distinct regimes in which aggregate production functions vary among countries according to their level of development.…”

Section: Introductionmentioning

confidence: 99%

Social capital, barriers to production and capital shares: implications for the importance of parameter heterogeneity from a nonstationary panel approach

Pedroni

2007

J of Applied Econometrics

146

129

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Technical Abstract: Recent advances in the growth literature have proposed that difficult to quantify concepts such as social capital may play an important role in explaining the degree of persistent income disparity that is observed among countries. Other recently explored possibilities include institutional mechanisms which generate barriers to aggregate production. An important limitation for empirical work in this area stems from the fact that it is difficult to distinguish sources of heterogeneity when direct observations are not available. In this study, we show how developments in the analysis of nonstationary panels can aid in this endeavor. In contrast to traditional dynamic panel data analysis, this approach focuses explicitly on low frequency behavior. Under relatively mild assumptions, the approach can be used to infer properties of aggregate production which are robust to the presence of large classes of unobserved features. In this framework we are able to estimate and test the distribution of production function parameters that would be required in order to generate conditional forecast convergence of per capita incomes even when some of the key factors required to explain growth are unobserved. The results indicate that in order to fully explain the observed persistence in the disparity of per capita incomes, the manner in which unobserved mechanisms influence production must go beyond merely accounting for differences in the trending behavior of aggregate productivity. Specifically, the results demonstrate that if such mechanisms are to be successful empirically, then they must also be able to account for cross country heterogeneity in steady state capital shares. This adds to a growing literature that provides support for models with multiple production regimes. Executive SummaryOne of the challenging tasks facing economists is a more thorough understanding as to why the disparity in national per capita incomes has remained so large across the globe. Most importantly, evidence as to whether or not these disparities are tending to diminish over time is at best mixed. This is despite the fact that many standard economic theories tell us that in an increasingly interconnected global economy, we should expect to see per capita incomes converge, with poorer countries eventually catching up to wealthier countries.Recently economists have conjectured that explanations for the apparent lack of convergence in per capita incomes internationally may lie in the differences among countries that have traditionally received less attention from the economics profession. These include international differences in social and political institutions, differences in social norms and the degree of social cohesion, differences in the levels of education and health care and differences in the degree of social and political openness to new ideas and new technologies. Collectively, these concepts have come to be termed social capital, human capital, and barriers to production. The challenge that these ideas present for...

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“…The threshold estimate was γ = 3.0637 with asymptotic 95% confidence set [0.0734, 7.4395] . AIDS as a threshold divided the full sample (89 countries) into two subsamples: one, containing 50 countries (AIDS ≤ 3.0637) and another, with 39 countries (AIDS 27 Papers in this literature include, Durlauf and Johnson (1995), Liu and Stengos (1999), Durlauf, Kourtellos and Minkin (2001), Kalaitzidakis et al (2001), and Masanjala and Papageorgiou (2004), just to name a few. For a more comprehensive discussion on parameter heterogeneity see Durlauf and Quah (1999, Vol.…”

Section: Endogenous Sample Splittingmentioning

confidence: 99%