###

Jürgen Antony

### Weak Scale Effects in Growth Models

####
Abstract:

Growth models of the
second generation type, e.g. the Jones (1995) or Young (1998) model,
all exhibit
a so called weak scale effect in per capita production, i.e. larger
economies
should have a higher per capita production than smaller economies.
However, in
an open economy context the scale of the economy is less important
because
countries can participate in the scale of other countries through
trade. This
paper develops a simple open economy growth model of the second
generation type
which shows the relevance of the scale of the trading partners for per
capita
production. This model is empirically tested using time series for the
G7
countries and alternatively a cross section of 80 countries for the
year 2000.
The scale of these economies is measured by their own scale as well as
the
scale of their major trading partners. The results show that there is a
significant effect of the own scale and the scale of the trading
partners on
per capita production. Additionally the paper provides a theoretical
model that
shows the relevance of the weak scale effect in explaining wage
inequality between
different types of workers.

JEL: O47, F43, F12

#### Paper:

Paper available as pdf-file.
Beitrag Nr. 276, Volkswirtschaftliche Diskussionsreihe, Institut
für
Volkswirtschaftslehre der Universität Augsburg
#### Contact:

Jürgen
Antony

email: juergen.antony@wiwi.uni-augsburg.de

v.
K., 17.08.2005