An increase over time in the quantity of goods and services produced within an economy.

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How is the growth rate form of the exchange equation derived?

Equation of exchange states: $ MV=PY $ where, $ M $ is Quantity of Money $ V $ is Velocity of Money $ P $ is Price Level $ Y $ is Real GDP Could someone please share how ...
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Why are real median household incomes stagnant?

This image shows US real median household income. It seems remarkable for its lack of growth over the last 20 years. This has been the subject of much political debate (around the "1%" and "occupy ...
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31 views

What's the relation between economic growth and buying power?

If a country had economic growth last year (2015) does that mean that the average citizen had a better buying power in that year (2015) than in the previous year (2014)? For example with their ...
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27 views

Under what circumstances is an increase in national output called economic growth?

An increase in output can be achieved in two basic ways. The first scenario: Aggregate demand increases, so supply extends. In this way the economy is making more use of its resources, but there is ...
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Solow Model, Growth rate of K/L and Y/L in steady state

I have been given the following setup: $$ Y=K^\theta (AL)^{1-\theta }$$ Where Y = Output, K = Capital, L = Labour and A = Productivity. $$ \frac{\dot{L}}{L} = n $$ $$ \frac{\dot{A}}{A} = g $$ The ...
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Solow Model: Steady State v Balanced Growth Path

Okay, so I'm having real problems distinguishing between the Steady State concept and the balanced growth path in this model: $$ Y = K^\beta (AL)^{1-\beta} $$ I have been asked to derive the steady ...
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96 views

Why rich countries remain rich?

I can think of two possible explanations: People there inherited the wealth of their ancestors (and of the companies of their generation). Advances in technology allows you to earn money more ...
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57 views

Difference between short run and long run supply curves?

We know that in short run supply curve is horizontal which means that prices remain rigid while quantity of supply adjusts according to demand. However, in long run this reverses. I know about some ...
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39 views

If America's economy collapsed what would happen to all of the citizens? What if the whole global economy collapsed? [closed]

My journalism professor is not an expert in finance or economics but has studied history. She is always giving us a negative lecture on the America's economy and how the rich are taking al of the ...
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28 views

In 21st century and a globalized world, is economic growth still the metric by which to measure a state's success?

Economic growth as a yardstick for a government's success is relatively new on a human historical scale. In my thinking it has arisen out of an expansion of the expected function of a state. States at ...
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28 views

Growth accounting using CES functions

I was wondering how one could use a CES function in growth accounting exercise, does anyone have notes or resources that demonstrate this exercise? I've done growth accounting exercise using Cobb-D ...
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Is inequality increasing? Does it correspond to increasing social harm?

I have a series of related questions. My understanding is. Economic wealth (ie. GDP) per capita is increasing around the world. We can refer to this as 'the pie is getting bigger'. At the same ...
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Solow model question about saving rates

Two countries A and B have identical production function $Y=AK^{1/3}N^{2/3}$, they are identical when it comes to all other factors with the exception that savings rate is $s_A>s_B$. a) GDP of A ...
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Consumption-Leisure Elasticity

The macro-literature insists on a consumption-leisure elasticity of 0 to match the balanced growth fact of constant labor supply. Is there any paper that tries to evaluate this elasticity using ...
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43 views

Microeconomic Model of Knowledge and Technology

Can you point me to any microeconomic models of knowledge and technology? It is intended to be used for simulation. The problem that arises is that you need to simulate the effects of technology on ...
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78 views

Neoclassical economic profit and growth theory versus marxian

Marxists have a very specific "profit" and "economic growth" theory. According to marxists, profit doesn't come from technology, whose cost will be reflected in the price of whatever commodity the ...
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111 views

Correlation and Causality: Data comparison of educational spending and GDP growth

I am interested as to whether or not Educational spending does or does not affect GDP and GDP growth (and as an aside GDP per Capita). As an overview, I've ranked the countries in each aspect (with 1 ...
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50 views

Is economic growth measured in real GDP or in real GDP per capita?

As an example, take a country where real GDP (measured in base year dollars) increases every year, but where the real GDP per capita (also measured in base year dollars) fluctuates, increasing and ...
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66 views

Does Pareto-efficency take into account growth?

I'll try to state my question clearly:   For a given a "wealth" allocation Wt = (w1, w2, w3, ... ) for individuals I = (i1, i2, i3, ... ). And a distribution of D= (w1/|W|, w2/|W|, w3/|W|, ... ...
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38 views

What happens to a production possibilities curve whenever there is too much labor? [closed]

If too much labor is added to a country's production, what happens to the production possibilities curve?
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858 views

What does it mean by 'intensive form'?

I encountered this phrase while reading up on growth models - that is to work with a function in intensive form. What does it mean when a function is in intensive form? Thanks!
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55 views

What do we know about the causes of global income inequality?

According to the IMF, the GDP per capita in the USA is about \$57,000 per year. In many central African countries the figure is more like \$500 or less. These examples are indicative of the incredibly ...
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Romer (1990): Balanced Growth in Consumption

Romer (1990) features a perfect competition final sector, a monopolistic competition intermediate sector, and an innovation sector that creates varieties for the intermediate sector, and manages to ...
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159 views

What is the relevance of economic growth?

Economic policies often mention high economic growth as a desirable path. For example, "We started to lay a new foundation for stronger, more durable economic growth." -- President Obama, ...
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How do economies grow?

These days, we hear again and again about the so-called "need" for economic growth. But how do countries actually grow economically? That is, why/how does their GDP increase over time? Related, what ...
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Subscription Growth Rate Model?

Can someone provide a formula (or set of formulas) for growth models for subscription based businesses? I've looked, but could only find general references about this business model -- no formulas. ...
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87 views

Hypothetical Long-term Business Cycle

I was looking through my textbook on Money, Banking, and the Economy and I came to the chart of the hypothetical short-term business cycle deviating around an upward sloping long-term cycle trend. My ...
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Moral and economic development paradox?

I have often listen to the old man who criticized the lack of morality in the Chinese people nowadays: "To get more money, break through to the bottom line to get more money!" Is there a ...
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60 views

Is UK house price spiral connected to debt based monetary system?

(cross-posted from Personal Finance & Money) Is the monetary system's debt basis* driving government policy on housing and property, and how could this ultimately affect personal housing ...
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124 views

Why some countries are wealthier than others?

Twin-peak of economic growth is one of the concepts discussed in economics. Most of explanations for poverty traps are baseed on the lack of infrastructures and public goods. How could be another main ...
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A recursive production function

I've been reading a book on a Kaleckian economics model, but there is a recursive function that has been bothering me. Can anyone provide some insight into why the equation why designed like this? ...
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on economic growth and Second Welfare theorem

While I was studying eighth edition of Mankiw's Macroeconomics, in chapter 9 on Economic Growth(pg. 245), the author mentions : "Some economists have proposed increasing the incentive to save by ...
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Simple Neoclassical Growth Model with Elastic Labor and Non-Standard Capital Adjustment Costs

I have the following social planner problem to maximize $\{c_t, k_t, n_t \}$ $\begin{gather*}E_0 \sum_{t=0}^\infty \beta^t U(c_t, 1 - n_t), 0 < \beta < 1\end{gather*}$ subject to ...
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Why the total value of the whole economy is constantly appreciating?

Take S&P for example. In the long run it just keeps climbing. Same for the market as a whole. Why would this happen? Why the market keeps going up (in the long term) all the time? (source)
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Deriving the golden-rule savings rate in a Solow Model

Consider an economy described by the per worker production function function: $$y = f(k) = 2k^\frac{1}{2}$$ and a depreciation rate $δ$ of $.05, 5%$. Considering what we know to be true of the ...
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102 views

What happens to effective consumption and capital in the Ramsey/Cass-Koopmans(RCK) model when technological growth decreases?

Is the conclusion that both decline correct? Both long and short run. Let $g_x$ denote growth rate of $x$, $g_c$ the growth rate of $\hat c$. In the model there is no depreciation so, $$ g_c = \frac ...
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123 views

Solow model: Partial derivative of y with respect to n

This is a really basic question regarding the solow model, I am trying to find the derivative of $y$ with respect to $n$. All I need to do is take the partial derivative $\frac{\partial y}{\partial ...
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How to intuit a necessary optimality conidtion involving growth rate of Lagrange multiplier in Ramsey growth model?

I encountered a necessary optimality conidtion involving growth rate of Lagrange multiplier in this note on Ramsey model $$\frac{\dot \lambda}{\lambda} = \mathcal {v} - (f^\prime(k)-\delta-\xi)$$ in ...
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Inflation and economic growth

Noticeable works about the impact of inflation on economic growth are dated back to the 90s. For example, Barro (1995): the impact effects from an increase in average inflation by 10 percentage ...
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Should we expect more structural technological unemployment if growth becomes more limited by natural resources and less by labour?

Technological unemployment, where unemployment arises from (with some oversimplification) workers being replaced by machines, has so far been temporary as new jobs were created that replaced the old ...
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Can we “prove” that slow growth is due to deficient demand?

We hear more and more these days about growth, particularly in the Eurozone and Britain, being beneath its long-term trend due to deficient demand. I can think of a few things which support that idea ...
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25 views

Macroeconomic formulas for global limited raw material economy exist?

Macroeconomics basic formulas are referring to a model in which the raw material are unlimited. Also the efficiency of production is a consequence of the pressure done by consumers (that buy the most ...
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Multiplicative factorization of stochastic growth time series--solving for an eigenfunction/eigenvector

I'm trying to understand the tools used/presented in Lars Hansen's Econometrica paper "Dynamic Valuation Decomposition within Stochastic Economies." In a part in the paper, Hansen introduces a ...
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107 views

Will China's GDP be greater than the USA's and Europe's combined?

A newspaper said in 2080 China can be a developed country, with a bigger population. Does that mean China's GDP is going to be bigger than the USA's and Europe's combined? Also, is this possible even ...
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Does Inflation Make Money Eventually Worthless?

I used this calculator: http://www.buyupside.com/calculators/inflationjan08.htm to estimate the future worth of 100 dollars in 100 years at 2% inflation. Does this really mean that a decent meal at a ...
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growth accounting, innovation, productivity and institutional analysis

I am looking to design a study which would have the following elements: 1) growth accounting using provincial data of a Asian country. 2) empirical research investigating link between innovation and ...
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102 views

Growth Accounting

In growth accounting the production function is defined as follows: $$Y= AF(K,L) $$ That means output $Y$ is dependent upon capital $K$, labour $L$ and technology $A$. Now to produce something, in ...
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249 views

Why is economic growth measured exponentially rather than linearly?

If economic growth is indeed highly desirable (see this question), why must this growth be exponential? With finite resources, exponential growth might hit limits rapidly (or be impossible?). Why not ...
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Is indefinite exponential economic growth possible?

Economic growth is frequently expressed as a % of GDP. Proponents of a steady-state economy postulate that perpetual exponential economic growth is impossible and that any system relying on it is ...
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Are there fundamental reasons why (exponential) economic growth is highly desirable?

One of the most widely published measures of the economy is the economic growth as a % of the GDP; i.e. the degree to which an economy grows exponentially. In my understanding, when the rate of ...