Which Solow Model – Homogeneous Technology-, Heterogeneous Technology-, or Human Capital-Augmented – Best Explains OECD Growth? Fresh Evidence from Bayesian Monte Carlo Simulations

The Solow growth model significantly impacts growth econometrics.However, its primary issue arises when applied to OECD samples.While incorporating human capital accumulation improves the model's goodness-of-fit, it remains low for this subset.Furthermore, augmenting the model with various technology variables leads to different results.In light of doubts regarding multicollinearity within the frequentist framework, this study aims to determine which modified model specification well explores the OECD growth pattern.By employing Monte Carlo simulation within the Bayesian panel non-linear framework, our findings suggest that the human capital-augmented Solow growth model with homogeneous technology best elucidates economic growth in OECD countries, aligning with the productivity convergence hypothesis.