Using the same sample of 100 countries for 1966 as Sommers and Suits,3 we obtained the following equation 4 GCF/GNP 26.87 (1.04) 4676.54 / (GNP/N + 300). (629.25) R2= .4 (4) Comparing this result with the estimation of the quadratic equation (1) of Sommers and Suits,5 we see that both equations have similar statistical properties. Using (4) as the basis for simulations of the growth path, however, we obtain completely different results from those of Sommers and Suits. Now per capita income does not attain a stationary level, but grows exponentially. The growth rate of per capita income, however, as can be seen from figure 2, attains a stationary level at 4.41 per cent per year. FIGURE 2. SIMULATED GROWTH RATE OF GNP PER CAPITA

In this study we consider the stability conditions and equilibrium properties of a long-run model of economic growth in which population and labor force are endogenous. Our way of formulating the stability conditions of this model in terms of deviations from a trend solution enables us to relate the model to a variety of historical data and to begin to explore the disequilibrium properties of the model. An additional purpose of this study is to show how sensitive the model is to specification changes. The prime example of this is our finding that the stability of the model with endogenous population and labor force requires the rates of growth of the birth rate and per capita income to be negatively related.