Convergence in a Two-Sector Nonscale Growth Model

Theo Eicher and Stephen J Turnovsky

Journal of Economic Growth, 1999, vol. 4, issue 4, 413-28

Abstract: Much of the convergence debate has focused solely on output. Recent empirical evidence suggests that crucial inputs, such as technology and capital, may exhibit markedly distinct convergence patterns. We examine the convergence characteristics of a two-sector nonscale model of growth that features population growth and endogenous technology. The model replicates key economic ratios and speeds of convergence with relative ease. Most important, however, is that capital and technology differ strikingly in their convergence paths and speeds. The nonconstancy of the convergence rates and the nonproportionality of the endogenous variables during transition suggests further refinements for the empirical tests of convergence. Copyright 1999 by Kluwer Academic Publishers

Date: 1999
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