Economics Discussion Papers / Institut für Weltwirtschaft 2008-27
In this work we update the reviews on endogenous growth theories, after two decades of theoretical and empirical contributions in order to explore whether recent empirical studies have become more supportive of their main predictions. Among the core topics studied in the growth econometric framework, namely, convergence, identification of growth determinants and factors responsible for growth differences in the data, the primary focus of this paper is on the last two. We will review, from macro growth regressions, studies that test primarily the performance of endogenous models in terms of significance and robustness of the coefficients of growth determinants. By highlighting methodological issues and critical discussion, we argue that: (i) causal inference drawn from the empirical growth literature remains highly questionable, (ii) there are estimates for a wide range of potential factors but their magnitude and robustness are still under debate. Our conclusion, however, is that, if properly interpreted, the predictions of endogenous growth models are increasingly gathering empirical support.