The World Distribution of Productivity: Country TFP Choice in a Nelson-Phelps Economy

Erika Färnstrand Damsgaard and Per Krusell

No 16375, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper builds a theory of the distribution of TFP across countries. The theory is based on the hypothesis that TFP improvements in a given country follow a Nelson-Phelps specification: they derive from past investments in the country itself and, through a spillover term, from past investments in other countries. Within a stochastic dynamic general equilibrium model of the world, each country invests in TFP and internalizes the dynamic effects of its investments, while ignoring any effects on others. Small symmetric idiosyncratic shocks can lead to large long-run differences in TFP levels and the world TFP distribution may become twin-peaked.

JEL-codes: F43 O1 O33 O4 (search for similar items in EconPapers)
Date: 2010-09
Note: EFG
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: The World Distribution of Productivity: Country TFP Choice in a Nelson-Phelps Economy (2011)
Working Paper: The World Distribution of Productivity: Country TFP Choice in a Nelson-Phelps Economy (2010)
Working Paper: The World Distribution of Productivity: Country TFP Choice in a Nelson-Phelps Economy (2010)
Working Paper: The World Distribution of Productivity: Country TFP Choice in a Nelson-Phelps Economy (2008)
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