Estimates of Technology and Convergence: Simulation Results

Graeme Wells and Thanasis Stengos

Ekonomia, 2010, vol. 13-14, issue 2-1, 97-108

Abstract: Using a Solow-Swan model with a stochastic saving rate and stochastic productivity we analyse the distributions of parameter estimates that emerge under various choices of technology, and of the dimension of the panel on which cross-section regressions are based. There are distinct asymmetries that characterise these distributions. These asymmetries become more pronounced when the effects of a near-unit root in the productivity shock become magnified over a longer time horizon and when the underlying production function is not Cobb-Douglas. Consequently, relying on traditional econometric transformations of these parameter estimates based on symmetric distributions, such as t ratios, will be quite misleading if one tries to assess technology parameters and ß -convergence.

JEL-codes: C15 (search for similar items in EconPapers)
Date: 2010
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Working Paper: ESTIMATES OF TECHNOLOGY AND CONVERGENCE: SIMULATION RESULTS (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ekn:ekonom:v:13-14:y:2010-2011:i:2-1:p:97-108

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