Amitrajeet A. BATABYAL
Department of Economics, Rochester Institute of Technology, 92 Lomb Memorial Drive, Rochester, NY 14623-5604, USA.
We study some measurement issues that arise when analyzing the long run behavior of the jth creative region’s time t log output per creative class member (yj(t)) when this region is part of an aggregate economy of j=1,…N creative regions. We focus first (second) on absolute (relative) convergence. In the absolute (relative) convergence case, the N creative regions are similar (dissimilar) in that they all have the same (different) balanced growth path (BGP) level of log output per creative class member denoted by yBGP(yjBGP) In the absolute convergence case, we analyze how to estimate the speed of convergence parameter (σ) and then discuss the relationship between the variance of yj(t) and that of yj(0) In the relative convergence case, we study the error associated with estimating σ using the methodology of the absolute convergence case. Finally, suppose yjBGP= a + bXj where Xj is an explanatory variable such as creative capital and a and b are positive constants. Here, we study how to estimate b from our knowledge of the coefficients of a related cross-region growth regression.
Keywords: Convergence, Creative Capital, Economic Growth, Measurement, Output
JEL classification: R11, C18