Externalities and Growth Accounting

64 Pages Posted: 18 Sep 2007 Last revised: 21 Sep 2010

See all articles by Jess Benhabib

Jess Benhabib

New York University - Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Boyan Jovanovic

New York University - Department of Economics

Date Written: December 1989

Abstract

We reexamine several bodies of data on the growth of output, labor, and capital, within the context of a model that admits the possibility of an externality to the capital input. The model is an augmented version of Paul Romer's (1987) reformulation of the Solow model. Unlike Romer, however, we find no evidence of an externality to capital. This finding implies nothing about the size of possible spillovers in the creation of knowledge because in our model, causality runs exclusively from knowledge to capital.

Suggested Citation

Benhabib, Jess and Jovanovic, Boyan, Externalities and Growth Accounting (December 1989). NBER Working Paper No. w3190, Available at SSRN: https://ssrn.com/abstract=467638

Jess Benhabib (Contact Author)

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

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Boyan Jovanovic

New York University - Department of Economics ( email )

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