[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/jmacro/v32y2010i1p103-117.html
   My bibliography  Save this article

Reinterpreting the Jones critique: A time series approach to testing and understanding idea driven growth models with transitional dynamics

Author

Listed:
  • Sedgley, Norman
  • Elmslie, Bruce
Abstract
This paper uses the concept of cointegration and a theoretical framework that incorporates transitional dynamics to re-examine the evidence concerning empirical support for 1st generation, semi-endogenous growth, and Schumpeterian growth. The data for the post-war US economy show that the endogenous innovation approach can be broadly supported by the time series data but the limitations of time series data makes it difficult to use cointegration estimates to make sharp predictions of key model parameters that distinguish different versions of idea driven growth theory. Once capital is included in the knowledge growth model testing alternative growth frameworks can be viewed as a test of the number of cointegrating relationships between macroeconomic variables. Our results suggest a single cointegrating vector, lending some support to fully endogenous growth theories as opposed to the semi-endogenous approach.

Suggested Citation

  • Sedgley, Norman & Elmslie, Bruce, 2010. "Reinterpreting the Jones critique: A time series approach to testing and understanding idea driven growth models with transitional dynamics," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 103-117, March.
    • Handle: RePEc:eee:jmacro:v:32:y:2010:i:1:p:103-117
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0164-0704(09)00094-9
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Howard Pack, 1994. "Endogenous Growth Theory: Intellectual Appeal and Empirical Shortcomings," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 55-72, Winter.
    2. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    3. Charles I. Jones, 2002. "Sources of U.S. Economic Growth in a World of Ideas," American Economic Review, American Economic Association, vol. 92(1), pages 220-239, March.
    4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    5. Laura Bottazzi & Giovanni Peri, 2007. "The International Dynamics of R&D and Innovation in the Long Run and in The Short Run," Economic Journal, Royal Economic Society, vol. 117(518), pages 486-511, March.
    6. Todo Yasuyuki & Miyamoto Koji, 2002. "The Revival of Scale Effects," The B.E. Journal of Macroeconomics, De Gruyter, vol. 2(1), pages 1-33, September.
    7. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    8. Eicher, Theo S & Turnovsky, Stephen J, 1999. "Convergence in a Two-Sector Nonscale Growth Model," Journal of Economic Growth, Springer, vol. 4(4), pages 413-428, December.
    9. Dolado, Juan J & Jenkinson, Tim & Sosvilla-Rivero, Simon, 1990. "Cointegration and Unit Roots," Journal of Economic Surveys, Wiley Blackwell, vol. 4(3), pages 249-273.
    10. Zoltan J. Acs & David B. Audretsch, 1989. "Patents' Innovative Activity," Eastern Economic Journal, Eastern Economic Association, vol. 15(4), pages 373-376, Oct-Dec.
    11. Joonkyung Ha & Peter Howitt, 2007. "Accounting for Trends in Productivity and R&D: A Schumpeterian Critique of Semi-Endogenous Growth Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(4), pages 733-774, June.
    12. Jakob Madsen, 2008. "Semi-endogenous versus Schumpeterian growth models: testing the knowledge production function using international data," Journal of Economic Growth, Springer, vol. 13(1), pages 1-26, March.
    13. Zoltan J. Acs & David B. Audretsch, 1989. "Patents as a Measure of Innovative Activity," Kyklos, Wiley Blackwell, vol. 42(2), pages 171-180, August.
    14. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    15. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    16. J. Bradford De Long & Lawrence H. Summers, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 445-502.
    17. Mark Crosby, 2000. "Patents, Innovation and Growth," The Economic Record, The Economic Society of Australia, vol. 76(234), pages 255-262, September.
    18. Norman H. Sedgley, 2006. "A Time Series Test of Innovation-Driven Endogenous Growth," Economic Inquiry, Western Economic Association International, vol. 44(2), pages 318-332, April.
    19. repec:bla:ecorec:v:76:y:2000:i:234:p:255-62 is not listed on IDEAS
    20. repec:bla:kyklos:v:42:y:1989:i:2:p:171-80 is not listed on IDEAS
    21. Dahan, Momi & Tsiddon, Daniel, 1998. "Demographic Transition, Income Distribution, and Economic Growth," Journal of Economic Growth, Springer, vol. 3(1), pages 29-52, March.
    22. Gene M. Grossman & Elhanan Helpman, 1994. "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 23-44, Winter.
    23. Charles I. Jones, 1999. "Growth: With or Without Scale Effects?," American Economic Review, American Economic Association, vol. 89(2), pages 139-144, May.
    24. Charles I. Jones, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 495-525.
    25. Peretto, Pietro F, 1998. "Technological Change and Population Growth," Journal of Economic Growth, Springer, vol. 3(4), pages 283-311, December.
    26. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    27. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
    28. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-144, January.
    29. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
    30. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
    31. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    32. Michael Kremer, 1993. "Population Growth and Technological Change: One Million B.C. to 1990," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 681-716.
    33. Schmookler, Jacob, 1962. "Economic Sources of Inventive Activity," The Journal of Economic History, Cambridge University Press, vol. 22(1), pages 1-20, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Herzer Dierk, 2022. "Semi-endogenous Versus Schumpeterian Growth Models: A Critical Review of the Literature and New Evidence," Review of Economics, De Gruyter, vol. 73(1), pages 1-55, April.
    2. Diana Escandon-Barbosa & Agustin Ramirez & Jairo Salas-Paramo, 2022. "The Effect of Cultural Orientations on Country Innovation Performance: Hofstede Cultural Dimensions Revisited?," Sustainability, MDPI, vol. 14(10), pages 1-13, May.
    3. Pedro Neves & Tiago Sequeira, 2017. "The Production of Knowledge: A Meta-Regression Analysis," CEFAGE-UE Working Papers 2017_03, University of Evora, CEFAGE-UE (Portugal).
    4. Pascal da Costa, 2014. "Semi-Endogenous Growth and Pollution: No Double Dividend in the Long Term," Working Papers hal-00994904, HAL.
    5. Neves, Pedro Cunha & Sequeira, Tiago Neves, 2018. "Spillovers in the production of knowledge: A meta-regression analysis," Research Policy, Elsevier, vol. 47(4), pages 750-767.
    6. Finn Martensen, 2013. "Globalization, Unemployment, and Product Cycles: Short- and Long-Run Effects," Working Paper Series of the Department of Economics, University of Konstanz 2013-16, Department of Economics, University of Konstanz.
    7. Sedgley, Norman & Elmslie, Bruce, 2015. "Taxation and fiscal expenditure in a growth model with endogenous fertility," Economics Discussion Papers 2015-35, Kiel Institute for the World Economy (IfW Kiel).
    8. Pedro Mazeda Gil & Oscar Afonso & Paulo B. Vasconcelos, 2015. "Skill-Structure Shocks, the Share of the High-Tech Sector and Economic Growth Dynamics," FEP Working Papers 554, Universidade do Porto, Faculdade de Economia do Porto.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    2. Grossmann, Volker, 2009. "Entrepreneurial innovation and economic growth," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 602-613, December.
    3. Volker Grossmann, 2008. "Entrepreneurial Innovation and Sustained Long-run Growth without Weak or Strong Scale Effects," CESifo Working Paper Series 2264, CESifo.
    4. Norman Sedgley & Bruce Elmslie, 2011. "Do We Still Need Cities? Evidence on Rates of Innovation from Count Data Models of Metropolitan Statistical Area Patents," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(1), pages 86-108, January.
    5. Dean Scrimgeour, 2015. "Dynamic Scoring in a Romer‐Style Economy," Southern Economic Journal, John Wiley & Sons, vol. 81(3), pages 697-723, January.
    6. Volker Grossmann & Thomas Steger, 2007. "Growth, Development, and Technological Change," CESifo Working Paper Series 1913, CESifo.
    7. Davis, Lewis S., 2008. "Scale effects in growth: A role for institutions," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 403-419, May.
    8. Steven Bond-Smith, 2021. "The unintended consequences of increasing returns to scale in geographical economics [Investing for prosperity: skills, infrastructure and innovation]," Journal of Economic Geography, Oxford University Press, vol. 21(5), pages 653-681.
    9. Prettner, Klaus, 2013. "Public education, technological change and economic prosperity," University of Göttingen Working Papers in Economics 149, University of Goettingen, Department of Economics.
    10. Boikos, Spyridon & Bucci, Alberto & Stengos, Thanasis, 2022. "Leisure and innovation in horizontal R&D-based growth," Economic Modelling, Elsevier, vol. 107(C).
    11. Steven Bond-Smith & Philip McCann & Les Oxley, 2018. "A regional model of endogenous growth without scale assumptions," Spatial Economic Analysis, Taylor & Francis Journals, vol. 13(1), pages 5-35, January.
    12. Turnovsky, S., 2000. "Growth in an Open Economy: some Recent Developments," Papers 5, Warwick - Development Economics Research Centre.
    13. Sener, Fuat, 2008. "R&D policies, endogenous growth and scale effects," Journal of Economic Dynamics and Control, Elsevier, vol. 32(12), pages 3895-3916, December.
    14. Stadler, Manfred, 2004. "Bildung, Innovationsdynamik und Produktivitätswachstum," Tübinger Diskussionsbeiträge 280, University of Tübingen, School of Business and Economics.
    15. Gray, Elie & Grimaud, André, 2016. "Using the Salop Circle to Study Scale Effects in Schumpeterian Growth Models: Why Inter-sectoral Knowledge Diffusion Matters," TSE Working Papers 16-676, Toulouse School of Economics (TSE).
    16. Kaixing Huang, 2016. "Population Growth, Human Capital Accumulation, and the Long-Run Dynamics of Economic Growth," School of Economics and Public Policy Working Papers 2016-13, University of Adelaide, School of Economics and Public Policy.
    17. A. Minniti & F. Venturini, 2014. "R&D Policy and Schumpeterian Growth: Theory and Evidence," Working Papers wp945, Dipartimento Scienze Economiche, Universita' di Bologna.
    18. Madsen, Jakob B. & Saxena, Shishir & Ang, James B., 2010. "The Indian growth miracle and endogenous growth," Journal of Development Economics, Elsevier, vol. 93(1), pages 37-48, September.
    19. Werner, Katharina & Prettner, Klaus, 2014. "Human capital, basic research, and applied research: three dimensions of human knowledge and their differential growth effects," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100448, Verein für Socialpolitik / German Economic Association.
    20. Dean Scrimgeour, 2015. "Dynamic Scoring in a Romer-Style Economy," Southern Economic Journal, Southern Economic Association, vol. 81(3), pages 697-723, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jmacro:v:32:y:2010:i:1:p:103-117. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622617 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.