A full test of a Romer's endogenous growth model

Pedro J. Gutiérrez

International Journal of Economics and Business Research, 2015, vol. 10, issue 4, 297-325

Abstract: It is widely accepted by theoretical and empirical economists that growth and fluctuations are the two sides of a unique dynamic evolution of the economy that, consequently, must be studied with identical analytical tools and techniques. Indeed, both business cycle theory and growth theory make use of the same type of dynamic general equilibrium models and share statistical and econometric procedures. However, unlike business cycle models, in which calibration and simulation have a long and successful tradition, growth models have scarcely applied these interesting and fruitful techniques. This paper overcomes this inconvenience by designing a fully specified Romer endogenous growth model, completely micro-founded, that turns into an AK model susceptible of calibration and simulation, and that allows the stylised facts of growth to be explained. When applied to the US economy, the proposed model provides a good fit to the empirical data.

Keywords: stochastic general equilibrium models; Romer; endogenous growth model; poverty trap; calibration; simulation.; US economy; USA; United States (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijecbr:v:10:y:2015:i:4:p:297-325

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