Persistence of Shocks to Output in Austria and Theories of Economic Growth

The paper analyzes the degree of output persistence in GDP in order to empirically discriminate between the Solow growth model, the perfect competition endogenous growth model and the imperfect competition endogenous growth model for the case of Austria. We find that a shock in the growth rate of output induces a permanent and larger effect on the level of GDP. This leads us to refute the Solow growth model and the perfect competition model of endogenous growth. We may not reject the imperfect competition growth model.