The World Distribution of Productivity: Country TFP Choice in a Nelson-Phelps Economy / Erika Färnstrand Damsgaard, Per Krusell.

Format:

Book

Author/Creator:

Damsgaard, Erika Färnstrand.

Contributor:

National Bureau of Economic Research.

Krusell, Per.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16375.

NBER working paper series no. w16375

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The World Distribution of Productivity

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

This paper builds a theory of the distribution of TFP across countries. The theory is based on the hypothesis that TFP improvements in a given country follow a Nelson-Phelps specification: they derive from past investments in the country itself and, through a spillover term, from past investments in other countries. Within a stochastic dynamic general equilibrium model of the world, each country invests in TFP and internalizes the dynamic effects of its investments, while ignoring any effects on others. Small symmetric idiosyncratic shocks can lead to large long-run differences in TFP levels and the world TFP distribution may become twin-peaked.

Notes:

Print version record

September 2010.