The Solow growth model: Vector autoregression (VAR) and cross-section time-series analysis

The paper examines whether the Mankiw et al. results regarding the Solow model are specific to the statistical methodology used. Therefore, instead of using cross-section data, annual data were used and the Solow model was investigated using a Vector Auto Regression (VAR) analysis for the G7 countries, and cross-section time-series data for the G3 countries. Analysis shows that, in both cases, the Mankiw et al. results generally hold. It also shows that the use of annual data can play an important and complementary role in revealing the differences in the growth process between individual countries.