A unified theory of the evolution of international income levels

2004

161 citations recorded by the source corpus.

This essay develops a theory of the evolution of international income levels. In particular, it augments the Hansen-Prescott theory of economic development with the Parente-Prescott theory of relative efficiencies and shows that the unified theory accounts for the evolution of international income levels over the last millennium. The essence of this unified theory is that a country starts to experience sustained increases in its living standard when production efficiency reaches a critical point. Countries reach this critical level of efficiency at different dates not because they have access to different stocks of knowledge, but rather because they differ in the amount of society-imposed constraints on the technology choices of their citizenry.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/72d3f9737945b840db13c8849f8e5a00dcaeeb8e

Citations in the corpus

• Institutions, Entrepreneurship, and Economic Growth: What Do We Know and What Do We Still Need to Know? (2016, unknown): “There is evidence that themain factor that accounts for different growth experience across countries is the difference in total factor productivity (Parente & Prescott, 2005).”
• Modernization of Agriculture and Long-Term Growth (2013, unknown): “pt = σ(1− α) μ α σ(1− α)π ¶ α α+σ(1−α) c (1−σ)(1−α) α+σ(1−α) e Aat Ant , (25)”