Solow and the States: Capital Accumulation, Productivity and Economic Growth
NBER Working Paper No. 4144
National, state, and local policy makers have increasingly focused their attention on policies toward economic growth, especially efforts to raise the rate of investment. Recent studies of economic growth have raised a debate over the role played by the investment rate in the long-run performance of the economy. Evidence from the states suggests that the effects of capital accumulation are consistent with the predictions of the neoclassical growth model. At the same time, the estimates indicate a substantial role for human capital accumulation in raising productivity, in contrast to the neoclassical focus on physical capital investment.
Published: National Tax Journal, Vol. XLVI, No. 4, December 1993, pp. 425-440.