Paul A. Johnson

Vassar College · Department of Economics

This article estimates a local linear version of the model used in the ‘log t’ convergence test. It documents the economically and statistically significant within-sample variation in the estimated value of the key parameter of that test when applied to data for 18 OECD countries during the twentieth century. This variation suggests the substantial...

We examine the record of crosscountry growth over the past 50 years and ask if developing countries have made progress on closing income gap between their per capita incomes and those in the advanced economies. We conclude that, as a group, they have not and then survey the literature on absolute convergence with particular emphasis on that from th...

We argue that modeling the cross-country distribution of per capita income as a mixture distribution provides a natural framework for the detection of convergence clubs. The framework yields tests for the number of component distributions that are likely to be more informative than "bump hunting" tests and includes a method of assessing the cross-c...

The evolution of economic growth theory throughout the post-war period has been deeply influenced by the effort to explain broad patterns in cross-country behaviour. In this entry, we discuss some of the salient empirical regularities associated with neoclassical and new growth economics and consider the shift in focus that has occurred. We first d...

The general question of convergence, understood as the tendency of differences between countries to disappear over time, is of long-standing interest to social scientists. In the 1950s and early 1960s, many analysts discussed whether capitalist and socialist economies would converge over time, in the sense that market institutions would begin to sh...

Solow’s method of decomposing the growth in aggregate output into that part due to growth in inputs and that part due to technological progress has become the standard method for measuring technological progress, or growth in total factor productivity. This contribution outlines the method and later refinements.

The presence or absence of convergence between rich and poor countries represents one of the most important questions in the new growth economics. New growth theories have been explicitly designed to explain forms of divergence which do not appear in their neoclassical counterparts. Despite substantial empirical work on convergence, there is no con...

This chapter provides an overview of current practices in the econometric analysis of economic growth. We describe some of the main methodologies that have been developed to study growth as well as some of the major empirical findings with which they are associated. Further, we explore the relationship between econometric analyses and growth theori...

In this paper we argue that modeling the cross-country distribution of per capita income as a mixture distribution provides a natural framework for the detection of convergence clubs. The framework yields tests for the number of component distributions that are likely to have more power than "bump hunting" tests and includes a natural method of ass...

The first professor of economics at the Australian National University, Trevor W. Swan was an Australian economist known for his foundational contributions to economic growth theory and the theory of economic policy in small open economies. Independently, he and Robert Solow simultaneously formulated what has become known as the Solow–Swan model of...

The evolution of economic growth theory throughout the post-war period has been deeply influenced by the effort to explain broad patterns in cross-country behaviour. We discuss some of the salient empirical regularities associated with neoclassical and new growth economics and consider the shift in focus that has occurred. We first describe the sty...

This paper provides a survey and synthesis of econometric tools that have been employed to study economic growth. While these tools range across a variety of statistical methods, they are united in the common goals of first, identifying interesting contemporaneous patterns in growth data and second, drawing inferences on long-run economic outcomes...

Using a continuous state space approach, this note extends Feyrer's (Feyrer, J., 2003. Convergence by Parts. Manuscript, Dartmouth College. (available at http://www.dartmouth.edu/-jfeyrer/parts.pdf)) study of the proximate determinants of the shape of the long-run distribution of income per capita. Contrary to Feyrer's finding of the primacy of tot...

This paper decomposes the feedback between US and UK price levels by frequency over the period 1791 to 1990. By adapting Geweke's (1982) method of decomposing the feedback between time series to the case of I(1) time series generated by a bivariate error-correction model, we find that most of the feedback between the two time series occurs at very...

This paper provides a survey and synthesis of econometric tools that have been employed to study economic growth. While these tools range across a variety of statistical methods, they are united in the common goals of first, identifying interesting contemporaneous patterns in growth data and second, drawing inferences on long-run economic outcomes...

Many researchers have used a cointegration approach to test for the Fisher effect. This note argues that the cointegration of the nominal interest rate and the inflation rate is consistent with any theory implying a stationary ex post real interest rate and so is not a sufficient condition for the Fisher effect to hold. The sufficient condition is...

This paper attempts to ascertain which of the convergence hypotheses – absolute, conditional, or club – best describes the economic development of the U.S. states since 1950. We use regression tree analysis to identify convergence clubs among the states and argue that the club characterization of the data dominates the other two. We find three conv...

This paper uses regression trees to examine the role of initial conditions in the economic development of the US states since 1950. We seek to ascertain whether existing differences in state per capita incomes reflect temporary deviations from a common stochastic steady state or the permanent effects of differences in initial conditions. We assume...

In this paper I apply the nonparametric methods proposed by Quah to data on US state relative income levels. In contrast to Quah’s results using cross-country data I find no evidence of polarization in the cross-state income distribution. The long-run density implied by the estimates is strongly unimodal. This finding is consistent with the results...

This paper uses regression tree analysis to locate changes in the real interest rate process from the early 1950s to the early 1990s. We find important changes in the mean and variance of the process in 1972:Q4, 1980:Q1, and 1986:Q2. Removing the changing mean from the ex post real interest rate leaves a time series that is largely unpredictable -...

this paper was done while I was at the University of Oregon.

This paper adapts Geweke's [1982] method of decomposing the feedback between time series by frequency to the case of time series generated by a bivariate error-- ####

The conventional wisdom is that postwar economic growth has been unpredictable. In the 1960s few observers accurately forecast which countries would grow quickly. In this paper we show that indexes of social development constructed in the early 1960s have considerable predictive power. These results indicate the importance of "social capability" fo...

This paper asks, 'how false is the expectations theory of the term structure?'. Most previous work has asked, 'is the expectations theory true?' and finds that it is not. The goal here is to gauge the economic importance of these answers in the negative by estimating the specification error in the expectations theory. The variance of the estimated...

This paper explores the role of 'social capability' in growth and development. We present a wide variety of evidence to show that rates of growth, in per capita income and TFP, are strongly related to the extent of a country's initial social development. We also show that differences in social development can explain polarization taking place in th...

This paper presents an easily implemented test of the assumption of a normally distributed error term for the ordered probit model. As this assumption is the central maintained hypothesis in all estimation and testing based on this model, the test ought to serve as a key specification test in the applied literature. A small Monte Carlo experiment s...

Regional economic growth in Portugal has mainly been studied from the perspective of convergence with data ending by the early 2000’s. The country as a whole has stopped converging to the output levels of the richest European countries by this period and has also become one of the most unequal EU member-states in terms of income distribution in the...

This paper provides some new evidence on the behavior of cross-country growth rates. We reject the linear model commonly used to study cross-country growth behavior in favor of a multiple regime alternative in which different economies obey different linear models when grouped according to initial conditions. Further, the marginal product of capita...

This paper develops and tests two models of capital utilization and investment when capital depreciates in use. I show that there are restrictions on technology that allow optimality conditions independent of the capital stock to be found. The optimality conditions are based on the observation that, if capital depreciates in use, a firm has two way...

This paper asks ‘How false is the Fisher hypotheis?’ Previous work has asked ‘Is the Fisher hypothesis true?’ The framework here characterizes the specification error in the the Fisher equation as ‘model noise’ following Durlauf and Hall [1988, 1989a, 1989b]. The noise provides a metric for the specification error. For the post-war period to Octobe...

In Treasury yield curves and cointegration’ (Applied Economics, 1993, 25, 361-67) Z. Zhang concluded that the term structure of interest rates contains multiple unit roots. This conclusion is inconsistent with the expectations theory of the term structure. In this paper I show that yield data on pure discount securities with maturities from one mon...

This paper reexamines the ability of the Solow-type growth models to explain the pattern of cross-country growth rates. Recent authors, most notably Mankiw, Romer and Weil [1990], have argued that differences in national growth rates are compatible with the view that each country has access to a common, neoclassical aggregate production function. S...

In this paper I show that cointegration tests of PPP using aggregate price indexes are not always robust to changes in relative prices. I offer a method of gauging the importance of these effects and find them to be unimportant in recent rejections of PPP.

Using Australian data, this note tests the srochastic implications of Hall's (1978) national-expectations life-cycle consumption model. The strong version of the hypothesis can only be rejected using lagged values of the change in the unemployment rate and a particular measure of disposable income.