Evaluating economic theories of growth and inequality: A study of the Danish economy

Arnab Bhattacharjee, Eduardo de Castro, Chris Jensen-Butler

    Research output: Working paper

    Abstract

    We present a model for studying regional and sectoral variation in total factor productivity (TFP) and develop an empirical test, based on the skewness of TFP distribution, to empirically distinguish between different growth theories. While negative skewness is consistent with the neo-Schumpeterian idea of catching up with leaders, zero skewness supports the neoclassical view that deviations from the frontier reflect only idiosyncratic productivity shocks. We argue that positive skewness corresponds to a model where the combination of exogenous technology with non-transferable knowledge accumulated in specific sectors and regions explains TFP. This argument provides the framework for an empirical model based on stochastic frontier analysis. The model is used to analyse regional and sectoral inequalities in productive efficiency across Danish sectors and regions.
    Original languageEnglish
    Place of PublicationSt. Andrews
    PublisherCentre for Dynamic Macroeconomic Analysis
    Publication statusPublished - 2007

    Publication series

    NameCDMA Working Paper Series

    Keywords

    • regional growth models
    • total factor productivity
    • stochastic frontier analysis
    • skewness

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