Divergence, convergence, and the history-augmented Solow Model

I have a new working paper available. This time, it is written with Vadim Kufenko and Klaus Prettner of the University of Hohenheim. It expands on a recent item in the literature about convergence which consists in using historical narratives to augment the Solow model in order to explain income differences between countries. This paper is the first of a series that we are working on which relies on better incorporating demographic insights into the convergence literature.  The abstract is below and the paper is available here:

We test the history-augmented Solow model with respect to its predictions on the patterns of divergence and convergence between the nowadays industrialized countries of the OECD. We show that the dispersion of incomes increased after the Industrial Revolution, peaked during the Second World War, and decreased afterwards. This pattern is fully consistent with the transitional dynamics implied by the history-augmented Solow model.


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