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Introduction to Modern Economic Growth data.. The implied values of β are similar, though the Adjusted R2 is somewhat lower.. of observations 98 98 107 To the extent that these regressio

Introduction to Modern Economic Growth data The implied values of β are similar, though the Adjusted R2 is somewhat lower

Table 3.2 Estimates of the Augmented Solow Model

MRW Updated data

1985 1985 2000

(.13) (.11) (.13)

ln(n + g + δ) -1.73 -1.02 -1.06

(.41) (.45) (.33)

(.07) (.07) (.13)

No of observations 98 98 107

To the extent that these regression results are reliable, they give a big boost to the augmented Solow model In particular, the estimate of Adjusted R2 suggests that over (or close to) three quarters of income per capita differences across countries can

be explained by differences in their physical and human capital investment behavior The immediate implication is that technology (TFP) differences have a somewhat limited role, confined to at most accounting for about a quarter of the cross-country income per capita differences If this conclusion were appropriate, it would imply that, as far as the proximate causes of prosperity are concerned, we could confine our attention to physical and human capital, and assume that countries have access

to more or less the same world technology The implications for the modeling of economic growth are of course quite major

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