Testing the Stability of a Production Function with Urbanization as a Shift Factor: An Application of Non-Stationary Panel Data Techniques

Suzanne McCoskey and Chihwa Kao

No 5, Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University

Abstract: Urban economists have long sought to explain the relationship between urbanization levels and output. In this paper we revisit this question and test the long-run stability of a production function with urbanization using non-stationary panel data techniques. Our results show that a long-run relationship between urbanization output per worker and capital per worker cannot be rejected for either our sample of 30 developing countries or our sample of 22 developed countries. In addition, we estimate the long-run average effects on GDPW of urbanization and capital. These results offer newer insights and potential for dynamic urban models than the simple cross-section approach.

JEL-codes: C22 C23 R11 (search for similar items in EconPapers)
Pages: 26 pages
Date: 1999-03
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Citations: View citations in EconPapers (8)

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