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Nonlinear Dynamics, Spillovers and Growth in the G7 Economies: An Empirical Investigation

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  • Lucio Sarno

Abstract

This paper proposes an empirical growth model which is consistent with a stochastic steady‐state labour productivity level varying over time and across countries, where the disequilibrium mechanism leading to long‐run equilibrium follows a nonlinear equilibrium correction model. Using data for the G7 economies during the postwar period since 1950, the empirical analysis yields a long‐run model which implies plausible estimates of the production function parameters. Postwar economic growth in each of the G7 countries appears to be well characterized by a nonlinear equilibrium correction model where the dynamic adjustment towards long‐run equilibrium is governed by a logistic function, while also capturing spillover effects in growth dynamics.

Suggested Citation

  • Lucio Sarno, 2001. "Nonlinear Dynamics, Spillovers and Growth in the G7 Economies: An Empirical Investigation," Economica, London School of Economics and Political Science, vol. 68(271), pages 401-426, August.
    • Handle: RePEc:bla:econom:v:68:y:2001:i:271:p:401-426
    DOI: 10.1111/1468-0335.00253
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    Cited by:

    1. Bergheim, Stefan, 2007. "Pair-wise cointegration in long-run growth models," Research Notes 24, Deutsche Bank Research.
    2. ByungWoo Kim, 2012. "Growth regression revisited: R&D promotes convergence?," Applied Economics, Taylor & Francis Journals, vol. 44(11), pages 1347-1362, April.
    3. Nevin Cavusoglu & Edinaldo Tebaldi, 2006. "Evaluating growth theories and their empirical support: An assessment of the convergence hypothesis," Journal of Economic Methodology, Taylor & Francis Journals, vol. 13(1), pages 49-75.
    4. Mody, Ashoka & Sarno, Lucio & Taylor, Mark P., 2007. "A cross-country financial accelerator: Evidence from North America and Europe," Journal of International Money and Finance, Elsevier, vol. 26(1), pages 149-165, February.
    5. Alan D. Zimm, 2005. "Derivation of a Logistic Equation for Organizations, and its Expansion into a Competitive Organizations Simulation," Computational and Mathematical Organization Theory, Springer, vol. 11(1), pages 37-57, May.

    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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