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The level and growth effects in the empirics of economic growth: some results with data from Guatemala

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  • B. Bhaskara Rao
  • Rukmini Gounder
  • Josef Loening

Abstract

Mankiw et al. (1992) have extended the Solow (1956) model by augmenting the production function with human capital. Its empirical success is impressive and it showed a procedure to improve the explanatory power of the neoclassical growth model. This article suggests an empirical procedure to further extend the neoclassical growth model to distinguish between the growth and level effects of shift variables like the human capital. We use time-series data from Guatemala to show that while the growth effects of education are small, they are significant and dominate the level effects.

Suggested Citation

  • B. Bhaskara Rao & Rukmini Gounder & Josef Loening, 2010. "The level and growth effects in the empirics of economic growth: some results with data from Guatemala," Applied Economics, Taylor & Francis Journals, vol. 42(16), pages 2099-2109.
    • Handle: RePEc:taf:applec:v:42:y:2010:i:16:p:2099-2109
    DOI: 10.1080/00036840701749068
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    1. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    2. John Y. Campbell & N. Gregory Mankiw, 1989. "Consumption, Income, and Interest Rates: Reinterpreting the Time Series Evidence," NBER Chapters, in: NBER Macroeconomics Annual 1989, Volume 4, pages 185-246, National Bureau of Economic Research, Inc.
    3. repec:fth:harver:1435 is not listed on IDEAS
    4. Masao Ogaki & Carmen M. Reinhart, 1998. "Measuring Intertemporal Substitution: The Role of Durable Goods," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 1078-1098, October.
    5. Barry P. Bosworth & Susan M. Collins, 2003. "The Empirics of Growth: An Update," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 113-206.
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    Cited by:

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    2. Jalil, Abdul & Idrees, Muhammad, 2013. "Modeling the impact of education on the economic growth: Evidence from aggregated and disaggregated time series data of Pakistan," Economic Modelling, Elsevier, vol. 31(C), pages 383-388.

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