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Is There Endogenous Long-Run Growth? Evidence Based on an Error Correction Model

S.-H. P. Lau

Working Papers from Michigan State - Econometrics and Economic Theory

Abstract: A major empirical interest in growth studies is whether a permanent change in economic fundamentals affects the long-run growth rate. However, a direct time series analysis of this hypothesis may not always be feasible because the permanence of many such changes is rather questionable. This paper explains why testing the long-run effect of a temporary change in investment share per capita output provides indirectly the answer regarding the effect of a (possibly hypothetical) permanent change in investments share, when output and investment are cointegrated.

Keywords: ECONOMIC MODELS; ECONOMIC GROWTH; INVESTMENTS (search for similar items in EconPapers)
JEL-codes: O40 E22 (search for similar items in EconPapers)
Date: 1999
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