In this paper we propose a standard Solow model augmented with public capital in the production function. The model solution displays two steady states, an unstable one and an efficient stable equilibrium. As a result the model predicts both divergence and non monotonic convergence; that is a transition path characterized by increasing growth rates up to the point where the traditional convergence behavior describes the successive evolution towards the stationary equilibrium. Using traditional cross section techniques the hypothesis of non monotonic catching-up is tested against a large sample of countries, obtaining favorable evidence.

Non Monotoninc Catching up in a Solow Model with Public Capital

CENSOLO, Roberto;BERTARELLI, Silvia
2006

Abstract

In this paper we propose a standard Solow model augmented with public capital in the production function. The model solution displays two steady states, an unstable one and an efficient stable equilibrium. As a result the model predicts both divergence and non monotonic convergence; that is a transition path characterized by increasing growth rates up to the point where the traditional convergence behavior describes the successive evolution towards the stationary equilibrium. Using traditional cross section techniques the hypothesis of non monotonic catching-up is tested against a large sample of countries, obtaining favorable evidence.
2006
Censolo, Roberto; Bertarelli, Silvia
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11392/494266
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