Evaluating Economic Theories of Growth and Inequality: A Study of the Danish Economy

Arnab Bhattacharjee (), Eduardo de Castro and (Late) Chris Jensen-Butler

CDMA Working Paper Series from Centre for Dynamic Macroeconomic Analysis

Abstract: We present a model for studying regional and sectoral variation in total factor productivity (TFP) and develop an empirical test, based on the skewness of TFP distribution, to empirically distinguish between different growth theories. While negative skewness is consistent with the neo-Schumpeterian idea of catching up with leaders, zero skewness supports the neoclassical view that deviations from the frontier reflect only idiosyncratic productivity shocks. We argue that positive skewness corresponds to a model where the combination of exogenous technology with non-transferable knowledge accumulated in specific sectors and regions explains TFP. This argument provides the framework for an empirical model based on stochastic frontier analysis. The model is used to analyse regional and sectoral inequalities in productive efficiency across Danish sectors and regions.

Keywords: Regional growth models; Total Factor Productivity; Stochastic Frontier Analysis; Skewness. (search for similar items in EconPapers)
JEL-codes: D24 O18 O3 O4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-knm
Date: 2007-11
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Persistent link: http://EconPapers.repec.org/RePEc:san:cdmawp:0723

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