An empirical test of exogenous versus endogenous growth models for the G-7 countries

Hyeon-seung Huh and David Kim

Economic Modelling, 2013, vol. 32, issue C, 262-272

Abstract: One of the key differences between exogenous and endogenous growth models is that a transitory shock to investment share exhibits different long-run effects on per-capita output. Exploring this difference, the present paper evaluates the empirical relevance of the two growth models for the G-7 countries. The underlying shocks are identified by an application of a dynamic factor model. Results show that a transitory shock to investment share permanently increases per-capita output in four countries, offering support to the endogenous growth model. This shock also contributes considerably to accounting for the long-run variability of per-capita output. Overall, the endogenous model is found to be empirically more plausible than previous time series studies suggest.

Keywords: Exogenous growth; Endogenous growth; Dynamic factor model (search for similar items in EconPapers)
JEL-codes: C32 E22 O40 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:32:y:2013:i:c:p:262-272

DOI: 10.1016/j.econmod.2013.02.012

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