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Verdoorn's law and increasing returns to scale: country estimates based on the cointegration approach

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  • R. I. D. Harris
  • A. Liu

Abstract

The Johansen approach to estimating long-run cointegration vectors is used with the Penn World Tables data to estimate returns to scale. Thus, this approach has the advantages of including a measure of capital, it overcomes the simultaneity problems associated with the single-equation Verdoorn law, and it involves estimating a correctly specified dynamic model in which is embedded the long-run solution(s). The results indicate that there is substantial evidence that increasing returns are the norm for the majority of countries.

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  • R. I. D. Harris & A. Liu, 1999. "Verdoorn's law and increasing returns to scale: country estimates based on the cointegration approach," Applied Economics Letters, Taylor & Francis Journals, vol. 6(1), pages 29-33.
    • Handle: RePEc:taf:apeclt:v:6:y:1999:i:1:p:29-33
    DOI: 10.1080/135048599353834
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    Cited by:

    1. Ofria, Ferdinando & Millemaci, Emanuele, 2010. "Kaldor-Verdoorn’s law and increasing returns to scale: a comparison across developed countries," MPRA Paper 30941, University Library of Munich, Germany.
    2. Fiona Tregenna, 2011. "Manufacturing Productivity, Deindustrialization, and Reindustrialization," WIDER Working Paper Series wp-2011-057, World Institute for Development Economic Research (UNU-WIDER).
    3. Sergio Destefanis, 2002. "The Verdoorn Law: Some Evidence from Non-Parametric Frontier Analysis," Palgrave Macmillan Books, in: John McCombie & Maurizio Pugno & Bruno Soro (ed.), Productivity Growth and Economic Performance, chapter 6, pages 136-164, Palgrave Macmillan.
    4. Giorgio Fazio & Enza Maltese & Davide Piacentino, 2013. "Estimating Verdoorn law for Italian firms and regions," Letters in Spatial and Resource Sciences, Springer, vol. 6(1), pages 45-54, March.
    5. Stefan Ederer & Stefan Schiman, 2018. "Effekte der gesamtwirtschaftlichen Produktion auf die Entwicklung der Produktivität in Österreich und der EU," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 44(1), pages 17-43.
    6. Andrew Sharpe, 2015. "Ontario's Productivity Performance, 2000-2012: A Detailed Analysis," CSLS Research Reports 2015-04, Centre for the Study of Living Standards.
    7. Tregenna, Fiona, 2011. "Manufacturing Productivity, Deindustrialization, and Reindustrialization," WIDER Working Paper Series 057, World Institute for Development Economic Research (UNU-WIDER).
    8. Millemaci, Emanuele & Ofria, Ferdinando, 2016. "Supply and demand-side determinants of productivity growth in Italian regions," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 138-146.
    9. Carvalho, Luciano Dias de & D'Amato, Stefan Wilson, 2021. "Exchange rate regimes, structural change and capital mobility in a developing economy," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    10. Walter Paternesi Meloni, 2024. "Okun vs. Verdoorn: distinguishing between cyclical and structural effects of output on productivity," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 41(2), pages 295-325, July.
    11. Stefan Ederer & Stefan Schiman-Vukan, 2018. "Produktion und Produktivität. Kaldor-Verdoorn-Effekte in der Sachgütererzeugung in Österreich und der EU," WIFO Monatsberichte (monthly reports), WIFO, vol. 91(1), pages 53-61, January.
    12. Gilberto Libânio & Sueli Moro, 2011. "Manufacturing Industryand Economic Growth in Latin America," Anais do XXXVII Encontro Nacional de Economia [Proceedings of the 37th Brazilian Economics Meeting] 86, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

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