One interpretation of my finding is that the observed variation in the capital–output ratio largely reflects variation around the steady state and therefore turns out to be economically and statistically insignificant, as indicated by the low point estimates and the large standard errors. Hence a further step would be to estimate a specification of the Solow model that explicitly allows for transitional dynamics around the steady state. Such a specification has also been developed by MRW, who emphasize that the Solow model predicts that countries reach different steady states, conditional on the variation in the determinants of the steady state.