Working Paper: NBER ID: w8365
Authors: N. Gregory Mankiw; David Romer; David Weil
Abstract: Is long-run economic growth exogenous? To address this question, we show that the empirical framework of Mankiw, Romer, and Weil (1992) can be extended to test any growth model that admits a balanced growth path; and we use that framework both to revisit variants of the Solow growth model and to evaluate simple alternative models of endogenous growth. To allow for the possibility that economies in our sample are not on their balanced growth paths, we also study the cross-sectional behavior of TFP growth, which we estimate using alternative measures of labor's share. Our broad conclusion, based on both model estimation and growth accounting, is that long-run growth is significantly correlated with behavioral variables such as the savings rate, and that this correlation is not easily explained by models in which growth is treated as the exogenous variable. Hence, future empirical studies should focus on models that exhibit endogenous growth.
Keywords: Economic Growth; Solow Model; Human Capital; Investment
JEL Codes: O40; O41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Country's rate of investment in physical capital (E22) | Long-run growth rate of output per worker (O49) |
| Rates of human capital accumulation (J24) | Economic growth (O00) |
| Population growth (J11) | Economic growth (O49) |
| Exogenous technical change (O49) | Long-run economic growth (O49) |
| Total factor productivity (TFP) growth (O49) | Country characteristics (O57) |