Kaveh Dalvand

(School of Economics, University of Maine, USA)

 

 

Abstract: In this paper first the text book Solow model for growth has been considered. Taking the rates of saving and population growth as exogenous to correlate them with growth rates (GDP change has been considered as a proxy for growth rate). Second, an augmented Solow model is used to include the accumulation of human capital as well as physical capital and see the effect of it on the economic growth. And finally, examining the predictions of the augmented Solow model is for a behavior out of steady state condition. In this part, the assumption of decreasing returns of all capitals is left out so that there are no steady state for countries’ per capita income and differences in income per capita can persist indefinitely even if countries have the same savings and population growth rates. The time span that the data is gathered is from1986-2010.

 

 

Key words: Solow model; cross-country growth convergence; production function; OLS

 

JEL codes: O470, E230