Steven Durlauf, Paul Johnson and Jonathan Temple 1113- Panel studies circumvent this issue by heavy reliance on the adequacy of the log-linear
approximation. The assumption is that countries in the sample are sufficiently close to
their steady-states that their dynamics can be described by a stationary process. This is
potentially problematic for studies that employ a broad cross-section of countries, at
least some of which may begin far from their steady-state. - This taxonomy is due to Galor (1996), who discusses the relationship between it and the
theoretical growth literature. His paper, and those of Azariadis (1996) and Azariadis and
Stachurski (2005), give many examples of models in which initial conditions matter for
long-run outcomes. - The discussion here is in terms of logyi,t, the log level of output per capita in countryi
at timet; but these definitions could be applied to other variables such as real wages or
life expectancy. We use logyi,trather thanyi,tdue to the general interest in the literature
in relative rather than absolute inequality. - “Von Ranke,”The Edinburgh Review, 1840. Quotation taken fromCritical and Historical
Essays: The Complete Writings of Lord Macaulay Part 4, reprinted by Kessinger Publishing.
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