Estimating and testing the multicountry endogenous growth model

De Visscher, Stef; Eberhardt, Markus; Everaert, Gerdie

Abstract

© 2020 Elsevier B.V. We estimate Cobb-Douglas production functions that parameterize unobserved total factor productivity as a global technology process interacted with country-specific absorptive capacities. In contrast to the existing literature we do not require proxies for these absorptive capacities but instead estimate them as time-varying stochastic processes. Our implementation allows us to test the contrasting predictions of alternative growth models and our results for a panel of advanced economies support the multicountry endogenous growth model in that an enhancement in absorptive capacity raises a country's long-run productivity level but not its growth rate. This finding is confirmed in an extended model where we allow a set of policy variables (financial development, human capital, competition policy, and knowledge stock) to affect absorptive capacity, none of which induce permanent growth effects. The proxies for financial development and knowledge stock stand out for their significant level effects.

Citation

De Visscher, S., Eberhardt, M., & Everaert, G. (2020). Estimating and testing the multicountry endogenous growth model. Journal of International Economics, 125, https://doi.org/10.1016/j.jinteco.2020.103325

• Journal Article Type: Article
• Acceptance Date: Mar 25, 2020
• Online Publication Date: Apr 1, 2020
• Publication Date: Jul 1, 2020
• Deposit Date: Mar 25, 2020
• Publicly Available Date: Oct 2, 2021
• Journal: Journal of International Economics
• Print ISSN: 0022-1996
• Electronic ISSN: 1873-0353
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 125
• Article Number: 103325
• DOI: https://doi.org/10.1016/j.jinteco.2020.103325
• Keywords: Economics and Econometrics; Finance
• Public URL: https://nottingham-repository.worktribe.com/output/4203393
• Publisher URL: https://www.sciencedirect.com/science/article/abs/pii/S0022199620300441?via%3Dihub
• Related Public URLs: https://data.mendeley.com/datasets/ksdtwy2jhs/1