CHARACTERIZING ECONOMIC GROWTH PATHS BASED ON NEW STRUCTURAL CHANGE TESTS

One of the prevalent topics in the economic growth literature is the debate between neoclassical, semi‐endogenous, and endogenous growth theories regarding the model that best describes the data. An important part of this discussion can be summarized in three mutually exclusive hypotheses: the “constant trend,” the “level shift,” and the “slope shift” hypotheses. In this article we propose the characterization of a country's economic growth path according to these break hypotheses. We address the problem in two steps. First, the number and timing of trend breaks is determined using new structural change tests that are robust to the presence, or not, of unit roots, surpassing technical and methodological concerns of previous empirical studies. Second, conditional on the estimated number of breaks and break dates, a statistical framework is introduced to test for general linear restrictions on the coefficients of the suggested linear disjoint broken trend model. We further show how the aforementioned hypotheses, regarding the economic growth path, can be analyzed by a test of linear restrictions on the parameters of the breaking trend model. We apply the methodology to historical per capita gross domestic product for an extensive list of countries. The results support the three alternative hypotheses for different sets of countries. (JEL C22, F43, O40)     

Rules, Social Ontology and Collective Identity

Mainstream game theory explains cooperation as the outcome of the interaction of agents who permanently pursue their individual goals. Amartya Sen argues instead that cooperation can only be understood by positing a type of rule-following behaviour that can be (and often is) out of phase with the pursuit of individual goals, due to the existence of a collective identity. However, Sen does not clarify the ontological preconditions for the type of social behaviour he describes. I will argue that Sen's account of collective identity can be best interpreted in the light of John Searle's notion of collective intentionality, while Sen's explanation of rule-following behavior and agency is best understood using the critical realist transformational model of social activity.