Economic Growth Analysis When Balanced Growth Paths May Be Time Varying

Andrew Mountford

Oxford Bulletin of Economics and Statistics, 2025, vol. 87, issue 3, 477-498

Abstract: The determinants of an economy's growth path for income per head may vary over time. In this paper, we apply unobserved components analysis to an otherwise standard panel model of economic growth dynamics so that an economy's long‐run relative income per head can change at any point of time. We apply this model to data for US states for 1929–2021 and the world economy for 1970–2019. In both datasets an economy's initial relative income per head is a good predictor of its long‐run relative income per head. Relatively poor economies on average remain relatively poor.

Date: 2025
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https://doi.org/10.1111/obes.12638

Related works:
Working Paper: Economic Growth Analysis When Balanced Growth Paths May Be Time Varying (2024)
Working Paper: Economic Growth Analysis When Balanced Growth Paths May Be Time Varying (2022)
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