Explaining economic growth in developed economies after 1980

Carlos Ballestero () and Carlos Posada

No 15012, Documentos de Trabajo de Valor Público from Universidad EAFIT

Abstract: We use the Aguion and Howitt (2009) theoretical model of endogenous economic growth to explain the declining economic growth in developed economies in the period 1981-2009. Aguion and Howitt theoretical framework combines Solownian and Schumpeterian elements in a single scenario, so that labor-augmenting technological progress and capital accumulation per efficiency unit of labor are both caused not only by exogenous changes in the investment rate but also by shocks to the degree of efficiency in the Research and Development (R&D) expenditure process. Empirical results revealed that per worker output growth rates and capital stock per efficiency unit of labor growth rates both have a common panel unit root. Since the panel cointegration tests and estimates revealed a statistical significant negative long-run relationship between per worker output growth rate and capital stock per efficiency unit of labor, the interpretation of the econometric results analized from the Aguion and Howitt ́s theoretical perspective is that labor-augmenting technological progress is endogenously falling over time mainly because of an exogenous deterioration of the environment conditions for the transformation of the investment rate and R&D expenditures in technological progress.

Keywords: Economic growth; Solownian and Schumpeterian models of growth; investment rate; R&D expenditures; Capital stock per efficient unit of labor (search for similar items in EconPapers)
JEL-codes: O11 O31 O33 O41 O47 O57 (search for similar items in EconPapers)
Pages: 31
Date: 2016-08-01
New Economics Papers: this item is included in nep-cse, nep-eff, nep-fdg, nep-gro and nep-ino
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Persistent link: https://EconPapers.repec.org/RePEc:col:000122:015012

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