Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/3878
Authors: 
Gundlach, Erich
Year of Publication: 
2006
Series/Report no.: 
Kiel Working Paper 1294
Abstract: 
Translated to a cross-country context, the Solow model (Solow, 1956) predicts that international differences in steady state output per person are due to international differences in technology for a constant capital output ratio. However, most of the cross-country growth literature that refers to the Solow model has employed a specification where steady state differences in output per person are due to international differences in the capital output ratio for a constant level of technology. My empirical results show that the former specification can summarize the data quite well by using a measure of institutional technology and treating the capital output ratio as part of the regression constant. This reinterpretation of the cross-country Solow model provides an interesting implication for empirical studies of international trade. Harrod-neutral technology differences as presumed by the Solow model can explain why countries have different factor intensities and may end up in different cones of specialization.
Subjects: 
Lerner diagram
Solow Model
JEL: 
O40
F11
Document Type: 
Working Paper

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