A simple cross-section model of economic growth stands the test of time

Abstract

The simple three-equation Sommers-Suits model of economic growth published in 1971 was one of the first that used a cross-section approach to study the effects of endogenous population growth rates on economic development. Re-estimation (following the same functional form as in the Sommers-Suits model) suggests that the model has stood the test of time reasonably well. There is evidence of convergence over time (as before), but the re-estimated model indicates the presence of a ‘poverty trap’- a threshold GNP per capita below which countries fail to grow.