This paper analyzes several aspects of convergence behaviour in the Solow growth model. In empirical work, a popular approach is to log-linearize around the steady-state. We investigate the conditions under which this approximation performs well, and discuss convergence behaviour when an economy is some distance from the steady-state. A formal analysis shows that convergence speeds will be heterogeneous across countries and over time. In particular, the Solow model implies that convergence to a growth path from above is slower than convergence from below. We find some support for this prediction in the data.
Download the new version (April 2007) jsm_jt10april2007.pdf. This is a revised version of Mathunjwa, Jochonia S. and Temple, Jonathan R. W. (2006). Convergence behaviour in exogenous growth models. University of Bristol discussion paper 06/590.