Capital Mobility in Neoclassical Models of Growth

Robert Barro, N. Gregory Mankiw and Xavier Sala-i-Martin

American Economic Review, 1995, vol. 85, issue 1, 103-15

Abstract: The neoclassical growth model accords with empirical evidence on convergence if capital is viewed broadly to include human investments, so that diminishing returns to capital set in slowly, and if differences in government policies or other variables create substantial differences in steady-state positions. However, open-economy versions of the theory predict higher rates of convergence than those observed empirically. The authors show that the open-economy model conforms with the evidence if an economy can borrow to finance only a portion of its capital, for example, if human capital must be financed by domestic savings. Copyright 1995 by American Economic Association.

Date: 1995
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Related works:
Working Paper: Capital Mobility in Neoclassical Models of Growth (1994)
Working Paper: Capital mobility in Neoclassical models of growth (1994)
Working Paper: Capital Mobility in Neoclassical Models of Growth (1992)
Working Paper: Capital Mobility in Neoclassical Models of Growth (1992)
Working Paper: Capital Mobility in Neoclassical Models of Growth (1992)
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