An empirical test of exogenous versus endogenous growth models for the G-7 countries

Hyeon Seung Huh, David Kim

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

One of the key differences between exogenous and endogenous growth models is that a transitory shock to investment share exhibits different long-run effects on per-capita output. Exploring this difference, the present paper evaluates the empirical relevance of the two growth models for the G-7 countries. The underlying shocks are identified by an application of a dynamic factor model. Results show that a transitory shock to investment share permanently increases per-capita output in four countries, offering support to the endogenous growth model. This shock also contributes considerably to accounting for the long-run variability of per-capita output. Overall, the endogenous model is found to be empirically more plausible than previous time series studies suggest.

Original languageEnglish
Pages (from-to)262-272
Number of pages11
JournalEconomic Modelling
Volume32
Issue number1
DOIs
Publication statusPublished - 2013 May

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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