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Applied Evolutionary Economics

New Empirical Methods and Simulation Techniques

Edited by Pier Paolo Saviotti

The expert contributors to this book examine recent developments in empirical methods and applied simulation in evolutionary economics. Using examples of innovation and technology in industry, it is the first book to address the following questions in a systematic manner: Can evolutionary economics use the same empirical methods as other research traditions in economics?; Is there a need for empirical methods appropriate to the subject matter chosen?; What is the relationship between appreciative theorising, case studies and more structured empirical methods?; and What is the relationship of modelling and simulation to empirical analysis?
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Chapter 9: Twin Peaks: What the Knowledge-based Approach Can Say about the Dynamics of the World Income Distribution

Andreas Pyka, Jens J. Kruger and Uwe Cantner


9. Twin peaks: what the knowledgebased approach can say about the dynamics of the world income distribution Andreas Pyka, Jens J. Krüger and Uwe Cantner 1. INTRODUCTION Nicholas Kaldor introduced in 1961 so-called stylized facts into growth theory which represent qualitative characteristics of time series of economic variables, such as per capita production, capital coefficient, capital intensity and so on. The trend in those data series and the correlations among them are described as a pattern of empirical regularities which should be the main focus of any growth theories, and their ability to provide an explanation for these facts is considered as a performance test. Among Kaldor’s list of stylized facts there is one of particular interest for this chapter: the growth rate of labour productivity is widely dispersed geographically. Only recently, out of new growth theory, has another stylized fact been added which is quite related. Romer (1989) adds that the growth of production cannot be solely explained by an increase in labour and capital input. For both of these stylized facts it is by no means farfetched to regard technological progress as a main determinant. A new stylized fact of economic growth has only recently been introduced into this discussion: the bimodal shape of the distribution of per capita income or the twin-peaked nature of that distribution. This observation suggests that the economies of the world can be divided into two groups: a group with high income – especially the industrialized countries – and one with low income...

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