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Modeling Economic Growth With Unpredictable Shocks: A State-Level Application For 1960-90

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  • Goetz, Stephan J.
  • Ready, Richard C.

Abstract

A Barro-type economic growth model is estimated for the 50 states in the U.S. using data for three decades beginning in 1960. Frontier estimation techniques are used to test for the presence of state-specific shocks to economic growth that are independent of the usual, normally-distributed random errors. We find that large, positive shocks to growth occur during the period 1960-90. Our results indicate that the error term structure assumed each other OLS may not be appropriate for modeling economic growth.

Suggested Citation

  • Goetz, Stephan J. & Ready, Richard C., 1995. "Modeling Economic Growth With Unpredictable Shocks: A State-Level Application For 1960-90," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(2), pages 1-9, December.
    • Handle: RePEc:ags:joaaec:15263
    DOI: 10.22004/ag.econ.15263
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    1. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    2. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    3. King, Robert G & Rebelo, Sergio, 1990. "Public Policy and Economic Growth: Developing Neoclassical Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 126-150, October.
    4. Jorgenson, Dale W & Yun, Kun-Young, 1990. "Tax Reform and U.S. Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 151-193, October.
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