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Inference on productivity differentials in multi-sector models of economic growth
Journal article   Peer reviewed

Inference on productivity differentials in multi-sector models of economic growth

William R J Alexander, Paul Hansen and P D Owen
Journal of Development Economics, Vol.51(2), pp.315-325
1996
url
https://doi.org/10.1016/S0304-3878(96)00417-8View
Published Version

Abstract

Applied Economics multi-sector models growth marginal productivity differentials wald tests
Non-zero marginal factor productivity differentials between sectors are a key feature of multi-sector models of economic growth, suggesting the potential for welfare gains through reallocation of resources between sectors. However, in existing studies, inference on the parameter reflecting productivity differentials is inadequate. Reparameterization of hypotheses relating to the productivity differential parameter allows, under the usual assumptions, exact finite-sample inference to be applied. Confidence intervals based on this approach applied to existing published studies suggest that many of the inferences on the potential gains in growth from exploiting inter-sectoral productivity differences are fragile.

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