Abstract
This paper suggests and tests a simple stochastic growth model with international technological links, where growth could be driven either by exogenous or endogenous accumulation of technological knowledge. The main prediction of the model is that per capita output in different countries are cointegrated. The model is tested on data for 15 industrialized countries over the period 1870–1985 and the results show that the model is rejected for most countries, but that it might be valid for the continental European countries. (JEL O11, O41, C32)
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I thank Giuseppe Bertola, Andrew Coleman, Avinash Dixit, Robin Lumsdaine, Torsten Persson, Danny Quah, Ken Rogoff, Loic Sadoulet, Anders Vredin, and two referees for comments, and Tim Vogelsang for help with data.