comment on convergence by parts for ec letters series (for publication August 04).wxp

A Continuous State Space Approachto “Convergence by Parts”‡Paul A. JohnsonAugust 2004Using a continuous state space approach, this note extends Feyrer's[2003] study of the proximate determinants of the shape of the long-rundistribution of income per capita. Contrary to Feyrer's finding of theprimacy of TFP, the results here imply that traps in both TFP growth andcapital accumulation may matter.JEL Classification: O40, O57Keywords: twin peaks, convergence club, discretisation, development accounting‡Department of Economics, Vassar College, Poughkeepsie NY 12604-0708. Email:pajohnson@vassar.edu. Telephone: 845-437-7395. Fax: 845-437-7576.1. Introduction The “development accounting” literature attempts to discover, and in some casesexplain, the contributions of differences in inputs and technology to cross-country1differences in output per capita. For example, Klenow and Rodríguez-Clare (1997)challenge the “neoclassical revival” begun by Mankiw, Romer, and Weil (1992) with thefinding that cross-country variations in productivity explain a good deal more than the 22%of the cross-country variation in output per capita found by the latter authors. Prescott(1998) finds a similarly important role for productivity differences which, he argues, cannotbe explained by cross-country differences in technical knowledge alone. Hall and Jones(1999) also demonstrate the importance of productivity disparities and argue that differencesin social infrastructure ...