《计量经济学》课程教学资源（国外经典教科书）Introduction to Modern Economic Growth

INTRODUCTION TO MODERN ECONOMIC GROWTH Western Offshoots g Westem Europe 1400 1600 1800 2000 FIGURE 1. 12. The evolution of average gDP per capita in Western Offshoots, Western Europe, Latin America, Asia and Africa, 1000- 2000 much larger divergence since the early 1800s. The analysis focused on the"uncon ditional "distribution of income per capita(or per worker ). In particular, we looked at whether the income gap between two countries increases or decreases irrespective of these countries' characteristics. Alternatively, we can look at the"conditional distribution(e. g, Barro and Sala-i-Martin, 1992). Here the question is whether the economic gap between two countries that are similar in observable characteristics is becoming narrower or wider over time. When we look at the conditional distribution of income per capita across countries the picture that emerges is one of conditional the postwar period, the income gap between countries that share the same characteristics typically closes over time(though it does so quite slowly) 19

Introduction to Modern Economic Growth Western Offshoots Western Europe Africa Latin America Asia 6 7 8 9 10 log gdp per capita 1000 1200 1400 1600 1800 2000 year Figure 1.12. The evolution of average GDP per capita in Western Offshoots, Western Europe, Latin America, Asia and Africa, 1000- 2000. much larger divergence since the early 1800s. The analysis focused on the “uncon￾ditional” distribution of income per capita (or per worker). In particular, we looked at whether the income gap between two countries increases or decreases irrespective of these countries’ characteristics. Alternatively, we can look at the “conditional” distribution (e.g., Barro and Sala-i-Martin, 1992). Here the question is whether the economic gap between two countries that are similar in observable characteristics is becoming narrower or wider over time. When we look at the conditional distribution of income per capita across countries the picture that emerges is one of conditional convergence: in the postwar period, the income gap between countries that share the same characteristics typically closes over time (though it does so quite slowly). 19

INTRODUCTION TO MODERN ECONOMIC GROWTH China g Britain Brazil India 1800 2000 FIGURE 1. 13. The evolution of income per capita in the United States, Britain, Spain, Brazil, China, India and Ghana, 1820-2000 This is important both for understanding the statistical properties of the world in- come distribution and also as an input into the types of theories that we would like to develop How do we capture conditional convergence? Consider a typical"Barro growth BIngt-1+Xt-10+ where gt t-1 is the annual growth rate between dates t-1 and t, yt-1 is output per worker(or income per capita) at date t-l and Xt-I is a vector of variables that the regression is conditioning on, These variables are included because are potential determinants of steady state income and/ or growth. First note TE without covariates equation(1. 1)is quite similar to the relationship shown in Figure 1.9 above. In particular, since gt t-1 In yt-In gt-1, equation(1. 1)can be written

Introduction to Modern Economic Growth USA Britain Spain Ghana Brazil China India 6 7 8 9 10 log gdp per capita 1800 1850 1900 1950 2000 year Figure 1.13. The evolution of income per capita in the United States, Britain, Spain, Brazil, China, India and Ghana, 1820-2000. This is important both for understanding the statistical properties of the world in￾come distribution and also as an input into the types of theories that we would like to develop. How do we capture conditional convergence? Consider a typical “Barro growth regression”: (1.1) gt,t−1 = β ln yt−1 + X0 t−1α + εt where gt,t−1 is the annual growth rate between dates t − 1 and t, yt−1 is output per worker (or income per capita) at date t − 1 and Xt−1 is a vector of variables that the regression is conditioning on. These variables are included because they are potential determinants of steady state income and/or growth. First note that without covariates equation (1.1) is quite similar to the relationship shown in Figure 1.9 above. In particular, since gt,t−1 ' ln yt − ln yt−1, equation (1.1) can be written 20

INTRODUCTION TO MODERN ECONOMIC GROWTH lnt≈(1+B)lny-1+et Figure 1.9 showed that the relationship between log gdp per worker in 2000 and log gdp per worker in 1960 can be approximated by the 45 line, so that in terms of this equation, B should be approximately equal to 0. This is confirmed by Figure 1. 14, which depicts the relationship between the(geometric) average growth rate between 1960 and 2000 and log gdp per worker in 1960. This figure reiterates that there is no "unconditional"convergence for the entire world over the postwar 8 KOR ROM Mwys CPV 8Ng四go MWI ZWE BFA GM ETH PRUOL SLYRI PER- SEAM log gdp per worker 1960 FIGURE 1. 14. Annual growth rate of gDP per worker between 1960 and 2000 versus log gdP per worker in 1960 for the entire world While there is no convergence for the entire world, when we look among the (original)OECD nations, we see a different pattern. Figure 1.15 shows that there a strong negative relationship between log gdp per worker in 1960 and the annual 21

Introduction to Modern Economic Growth as ln yt ' (1 + β) ln yt−1 + εt. Figure 1.9 showed that the relationship between log GDP per worker in 2000 and log GDP per worker in 1960 can be approximated by the 45◦ line, so that in terms of this equation, β should be approximately equal to 0. This is confirmed by Figure 1.14, which depicts the relationship between the (geometric) average growth rate between 1960 and 2000 and log GDP per worker in 1960. This figure reiterates that there is no “unconditional” convergence for the entire world over the postwar period. ARG AUS AUT BDI BEL BEN BFA BGD BOL BRA BRB CAN CHE CHL CHN CIV CMR COG COL COM CPV CRI DNK DOM ECU EGY ESP ETH FIN FRA GAB GBR GHA GIN GMB GNB GRC GTM HKG HND IDN IND IRL IRN ISL ISR ITA JAM JOR JPN KEN KOR LKA LSO LUX MAR MDG MEX MLI MOZ MUS MWI MYS NER NGA NIC NLD NOR NPL NZL PAK PAN PER PHL PRT PRY ROM RWA SEN SLV SWE SYC SYR TCD TGO THA TTO TUR TZA UGA URY USA VEN ZAF ZMB ZWE -.0 2 0 .0 2 .0 4 .0 6 annual gro wth rate 19 6 0-2 0 0 0 6 7 8 9 10 log gdp per worker 1960 Figure 1.14. Annual growth rate of GDP per worker between 1960 and 2000 versus log GDP per worker in 1960 for the entire world. While there is no convergence for the entire world, when we look among the (original) OECD nations, we see a different pattern. Figure 1.15 shows that there is a strong negative relationship between log GDP per worker in 1960 and the annual 21

INTRODUCTION TO MODERN ECONOMIC GROWTH growth rate between 1960 and 2000 among the OECd countries. What distinguishes this sample from the entire world sample is the relative homogeneity of the Oecd countries, which have much more similar institutions, policies and initial conditions than the entire world. This suggests that there might be a type of conditional convergence when we control for certain country characteristics potentially affecting economic growth BEL USA log gdp per worker 1960 FIGURE 1. 15. Annual growth rate of gdP per worker between 1960 and 2000 versus log gdp per worker in 1960 for core OECD countries This is what the vector Xt-I captures in equation(1.1). In particular, when this vector includes human capital-related variables such as years of schooling or life ex- pectancy, Barro and Sala-i-Martin estimate B to be approximately -0.02, indicating that the income gap between countries that have the same human ca ment has been narrowing over the postwar period on average at about 2 percent

Introduction to Modern Economic Growth growth rate between 1960 and 2000 among the OECD countries. What distinguishes this sample from the entire world sample is the relative homogeneity of the OECD countries, which have much more similar institutions, policies and initial conditions than the entire world. This suggests that there might be a type of conditional convergence when we control for certain country characteristics potentially affecting economic growth. AUS AUT BEL CAN CHE DNK ESP FIN FRA GBR GRC IRL ISL ITA JPN LUX NLD NOR NZL PRT SWE USA .01 .0 2 .0 3 .0 4 annual gro wth rate 19 6 0-2 0 0 0 9 9.5 10 10.5 log gdp per worker 1960 Figure 1.15. Annual growth rate of GDP per worker between 1960 and 2000 versus log GDP per worker in 1960 for core OECD countries. This is what the vector Xt−1 captures in equation (1.1). In particular, when this vector includes human capital-related variables such as years of schooling or life ex￾pectancy, Barro and Sala-i-Martin estimate β to be approximately -0.02, indicating that the income gap between countries that have the same human capital endow￾ment has been narrowing over the postwar period on average at about 2 percent a year. 22

INTRODUCTION TO MODERN ECONOMIC GROWTH Therefore, while there is no evidence of (unconditional) convergence in the ncome distribution over the postwar era(and in fact, if anything there is diver gence in incomes across nations), there is some evidence for conditional convergence, meaning that the income gap between countries that are similar in observable char acteristics appears to narrow over time. This last observation is relevant both for understanding among which countries the divergence has occurred and for determin- ing what types of models we might want to consider for understanding the process of economic growth and differences in economic performance across nations. For ex ample, many of the models we will study below, including the basic Solow and the neoclassical growth models, suggest that there should be"transitional dynamics as economies below their steady-state(target) level of income per capita grow to- wards that level. Conditional convergence is consistent with this type of transitional d namics 1. 6. Correlates of Economic growth The discussion of conditional convergence in the previous section emphasized the importance of certain country characteristics that might be related to the pro- cess of economic growth. What types of countries grow more rapidly? Ideally, we would like to answer this question at a"causal" level. In other words, we would like to know which specific characteristics of countries(including their policies and institutions) have a causal effect on economic growth. A causal effect here refers to the answer to the following counterfactual thought experiment: if, all else equal a particular characteristic of the country were changed"exogenously"(i.e, not as part of equilibrium dynamics or in response to a change in other observable or un- observable variables), what would be the effect on equilibrium growth? Answering such causal questions is quite challenging, however, precisely because it is difficult to isolate changes in endogenous variables that are not driven by equilibrium dynamics or by some other variables For this reason, we start with the more modest question of what factors correlate with post-war economic growth. With an eye to the theories that will come in the next two chapters, the two obvious candidates to look at are investments in physical capital and in human capital

Introduction to Modern Economic Growth Therefore, while there is no evidence of (unconditional) convergence in the world income distribution over the postwar era (and in fact, if anything there is diver￾gence in incomes across nations), there is some evidence for conditional convergence, meaning that the income gap between countries that are similar in observable char￾acteristics appears to narrow over time. This last observation is relevant both for understanding among which countries the divergence has occurred and for determin￾ing what types of models we might want to consider for understanding the process of economic growth and differences in economic performance across nations. For ex￾ample, many of the models we will study below, including the basic Solow and the neoclassical growth models, suggest that there should be “transitional dynamics” as economies below their steady-state (target) level of income per capita grow to￾wards that level. Conditional convergence is consistent with this type of transitional dynamics. 1.6. Correlates of Economic Growth The discussion of conditional convergence in the previous section emphasized the importance of certain country characteristics that might be related to the pro￾cess of economic growth. What types of countries grow more rapidly? Ideally, we would like to answer this question at a “causal” level. In other words, we would like to know which specific characteristics of countries (including their policies and institutions) have a causal effect on economic growth. A causal effect here refers to the answer to the following counterfactual thought experiment: if, all else equal, a particular characteristic of the country were changed “exogenously” (i.e., not as part of equilibrium dynamics or in response to a change in other observable or un￾observable variables), what would be the effect on equilibrium growth? Answering such causal questions is quite challenging, however, precisely because it is difficult to isolate changes in endogenous variables that are not driven by equilibrium dynamics or by some other variables. For this reason, we start with the more modest question of what factors correlate with post-war economic growth. With an eye to the theories that will come in the next two chapters, the two obvious candidates to look at are investments in physical capital and in human capital. 23