Capital Mobility in Neoclassical Models of Growth

Robert Barro, N. Gregory Mankiw and Xavier Sala-i-Martin

No 1019, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The neoclassical growth model accords with empirical evidence on convergence if capital is viewed broadly to include human investments, so that diminishing returns to capital set in slowly, and if differences in government policies or other variables create substantial differences in steady-state positions. Open economy versions of the theory predict higher rates of convergence than those observed empirically, however. We show that the open economy model conforms with the evidence if an economy can borrow to finance only a portion of its capital, for example, if human capital must be financed by domestic savings.

Keywords: Capital Mobility; Convergence; Neoclassical Growth (search for similar items in EconPapers)
JEL-codes: E13 F21 F43 O40 O41 (search for similar items in EconPapers)
Date: 1994-09
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Capital Mobility in Neoclassical Models of Growth (1995)
Working Paper: Capital mobility in Neoclassical models of growth (1994)
Working Paper: Capital Mobility in Neoclassical Models of Growth (1992)
Working Paper: Capital Mobility in Neoclassical Models of Growth (1992)
Working Paper: Capital Mobility in Neoclassical Models of Growth (1992)
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