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Title: |
The Return to Capital and Convergence in a Two Sector Model of
Endogenous Growth |
| Author: |
Song, E. Young |
| Author
Affiliation: |
Sogang U |
| Source: |
International Economic Journal, Winter 2000, v. 14, no. 4, pp. 143-163 |
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Publication Date: |
Winter 2000 |
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Abstract: |
This paper obtains a simple algebraic
derivation of the transitional dynamics of a two-sector endogenous
growth model. This paper finds that the return to capital and the growth
rate of output fall over time on the transition path if the initial
ratio of physical capital to human capital is lower than the steady
state level. It also shows that two sector endogenous growth models are
consistent with the evidence on conditional convergence found by Barro
(1991) and Mankiw, Romer, and Weil (1991). Neoclassical growth models
and endogenous growth models are impossible to distinguish in terms of
the falling rate of return on capital or in terms of conditional
convergence. |
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