TY  - JOUR
AU  - Chari,V. V.
AU  - Kehoe,Patrick J.
AU  - McGrattan,Ellen R.
TI  - The Poverty of Nations: A Quantitative Exploration
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5414
PY  - 1996
Y2  - January 1996
UR  - http://www.nber.org/papers/w5414
L1  - http://www.nber.org/papers/w5414.pdf
N1  - Author contact info:
Varadarajan V. Chari
Department of Economics
University of Minnesota
1035 Heller Hall
271 - 19th Avenue South
Minneapolis, MN 55455
Tel: 612/626-5171
Fax: (612) 624-0209
E-Mail: varadarajanvchari@gmail.com

Patrick Kehoe
Research Department
Federal Reserve Bank of Minneapolis
90 Hennepin Avenue
Minneapolis, MN  55480-0291
Tel: 612/204-5525
Fax: 612/204-5515
E-Mail: pkehoe@res.mpls.frb.fed.us

Ellen McGrattan
Research Department
Federal Reserve Bank of Minneapolis
90 Hennepin Avenue
Minneapolis, MN 55480
Tel: 612/204-5523
Fax: 612/204-5515
E-Mail: erm@mcgrattan.mpls.frb.fed.us
AB  - We document regularities in the distribution of relative incomes and patterns of investment in countries and over time.  We develop a quantitative version of the neoclassical growth model with a broad measure of capital in which investment decisions are affected by distortions.  These distortions follow a stochastic process which is common to all countries.  Our model generates a panel of outcomes which we compare to the data.  In both the model and the data, there is greater mobility in relative incomes in the middle of the income distribution than at the extremes.  The 10 fastest growing countries and the 10 slowest growing countries in the model have growth rates and investment-output ratios similar to those in the data.  In both the model and the data, the `miracle' countries have nonmonotonic investment-output ratios over time.  The main quantitative discrepancy between the model and the data is that there is more persistence in growth rates of relative incomes in the model than in the data.
ER  -