Why are Some Countries Richer than Others? A Skeptical View of Mankiw-Romer-Weil's Test of the Neoclassical Growth Model

33 Pages Posted: 15 Jul 2005

See all articles by Jesus Felipe

Jesus Felipe

Asian Development Bank

John McCombie

University of Cambridge - Department of Land Economy

Abstract

This paper provides evidence of a problem with the influential testing and assessment of Solow's (1956) growth model proposed by Mankiw et al.'s (1992). It is shown that when the assumption of a common rate of technical progress is relaxed in the neoclassical model, the goodness of fit of Mankiw equation improves dramatically. However, and more importantly, it is shown that this result, as well as the magnitude of estimates obtained, merely reflects a statistical artifact. This has serious implications for the possibility of actually testing Solow's growth model.

Suggested Citation

Felipe, Jesus and McCombie, John S. L., Why are Some Countries Richer than Others? A Skeptical View of Mankiw-Romer-Weil's Test of the Neoclassical Growth Model. Metroeconomica, Vol. 56, No. 3, pp. 360-392, July 2005, Available at SSRN: https://ssrn.com/abstract=758581

Jesus Felipe (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

John S. L. McCombie

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

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