Economics 314

Macroeconomic Theory
Jeffrey Parker, Reed College
Paper of the Week

Assigned paper

Mankiw, N. Gregory, David Romer, and David N. Weil. 1992. A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics 107 (2):407-37.

Reading suggestions

  • The theoretical development of the model in Section I should be familiar based on Romer's Chapter 1.

Questions for analysis

  1. On page 410, MRW calibrate the value of alpha (α) to be one-third because that is approximately "capital's share in income." Use Romer's equation (1.7) and the MPK expression following it to show that capital's share (K*MPK/Y = k*MPK/y) is equal to alpha when the production function is Cobb-Douglas.
  2. MRW use three different estimating samples. What is their rationale for using multiple samples? How do the results differ and why? Which set of results would you take to be most reliable and why? 
  3. In what ways do the results of Table I support the Solow model? In what ways do they conflict with it? How do the authors enhance the model between Table I and Table II? How do the results reported in Table II support and/or conflict with the Solow model?