Evaluating Economic Theories of Growth and Inequality: A Study of the Danish Economy

Arnab Bhattacharjee; Eduardo de Castro; Chris Jensen-Butler

Evaluating Economic Theories of Growth and Inequality: A Study of the Danish Economy

Arnab Bhattacharjee, Eduardo de Castro, Chris Jensen-Butler

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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 language	English
Place of Publication	St. Andrews
Publisher	Centre for Dynamic Macroeconomic Analysis
Number of pages	38
Publication status	Published - 2007

Publication series

Name	CDMA Working Paper Series
Publisher	School of Economics and Finance, University of St. Andrews
No.	CDMA07/23

Keywords

Regional growth models
Total factor productivity
Stochastic frontier analysis
Skewness

UN SDGs

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N2 - 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.

AB - 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.

KW - Regional growth models

KW - Total factor productivity

KW - Stochastic frontier analysis

KW - Skewness

M3 - Working paper

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BT - Evaluating Economic Theories of Growth and Inequality: A Study of the Danish Economy

PB - Centre for Dynamic Macroeconomic Analysis

CY - St. Andrews

ER -

Evaluating Economic Theories of Growth and Inequality: A Study of the Danish Economy

Abstract

Publication series

Keywords

UN SDGs

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