Journal of Economic Growth

, Volume 1, Issue 3, pp 363–389

Reopening the convergence debate: A new look at cross-country growth empirics

  • Francesco Caselli
  • Gerardo Esquivel
  • Fernando Lefort
Article

Abstract

There are two sources of inconsistency in existing cross-country empirical work on growth: correlated individual effects and endogenous explanatory variables. We estimate a variety of cross-country growth regressions using a generalized method of moments estimator that eliminates both problems. In one application, we find that per capita incomes converge to their steady-state levels at a rate of approximately 10 percent per year. This result stands in sharp contrast to the current consensus, which places the convergence rate at 2 percent. We discuss the theoretical implications of this finding. In another application, we perform a test of the Solow model. Again, contrary to prior reults, we reject both the standard and the augmented version of the model.

Keywords

convergence growth generalized method of moments 

Jel classification

O41 O47 

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Copyright information

© Kluwer Academic Publishers 1996

Authors and Affiliations

  • Francesco Caselli
    • 1
  • Gerardo Esquivel
    • 2
  • Fernando Lefort
    • 3
  1. 1.Harvard UniversityHarvardUSA
  2. 2.Harvard UniversityHarvardUSA
  3. 3.Harvard UniversityHarvardUSA

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