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

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2answers
27 views

A maximization program expressed by per capita variales - Ramsey model

I have a problem to be maximized with the following program $$max\int_{0}^{\infty}\left\{ u\left(C\right)+\beta S^{\chi}\right\} e^{-\rho t}dt$$ s.t $$\dot{K}=AK-C$$ $$\dot{S}=\left(1-S\right)S-\...
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1answer
25 views

Ramsey growth model - per capita vs aggregate variables

I am reading a paper Okuguchi,1981 with a Ramsey growth model. There is a constant population growth $n$ such as $L(t)=e^{nt}$. The way he writes the Hamiltonian is quite interesting (equation 5 on ...
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0answers
9 views

Economic history/geography of the UK (1960-today)

I am not an economist and I am looking for reference knowledge about how the economy of the UK (mainly focussing on England/Scotland/Wales) developed over the past 5 decades. The kind of information I ...
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0answers
5 views

Effect of FDI barrier removal

What would be the effects on gdp growth of a hypothetical country, if it removed all restrictions on FDI inflow?
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1answer
22 views

Perpetual Youth Model

I am reading the famous paper of Blanchard,1985. There are some fundamental stuff that I did not really get. 1) Why they call it "perpetual youth"? 2) On page 225, he mentions the cohort size. So, ...
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2answers
18 views

Nominal Growth rate above Nominal Interest Rate

I'm reading Ray Dalio's "An In-Depth Look at Deleveragings", and at one point he's talking about central banks providing liquidity and credit support, and he states: "This produces relief and, if ...
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1answer
8 views

Devising a model for inflation for a closed points system

I am working on a project that involves points. The idea is that users will earn points and redeem them for certain rewards. The means via which the users earn are fairly limited (They can attend a ...
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votes
0answers
14 views

Optimal Time-Consistent Fiscal Policy with Finite Lifetimes

I am reading Optimal Time-Consistent Fiscal Policy with Finite Lifetimes by Calvo and Obstfeld. Here is the paper : Calvo and Obstfeld (1988) In fact, their model consists of two stages. In the ...
2
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1answer
47 views

Does credit really help an economy?

I'm reading Ray Dalio's How the Economic Machine Works, and although I understand the role of credit in an economy, I don't understand whether credit actually adds any value to an economy. Ray says ...
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1answer
16 views

How does domestic demand affect the domestic currency's value

If an economy grows, due to a tax reduction for example, how does that affect the exchange rate? My logic would be that reduced taxes put more money into people's pockets, which they then use to buy ...
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0answers
53 views

Improve my solution: Question on solow model

There is a question about Solow growth and Ramsey model, compared to solow model, the Ramsey model is better to explain growth patterns across countries because it predicts a slower convergence ...
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1answer
70 views

Quarterly GDP growth: YoY vs QoQ / terminology

Quarterly GDP growth can be calculated either in terms of YoY change or - in the case of seasonally adjusted data - in terms of QoQ change. (A third option would be to annualize the QoQ rate.) To ...
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0answers
31 views

Solow growth model deriving solutions

I was reading a note on Solow model in continuous time, and it said we can derive K, C, and Y from the key equation. But the steps were omitted, and I have no clue with it. How can I derive these ...
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2answers
61 views

Must a market-based economy constantly expand?

I vaguely recall from my reading of Adam Smith’s “The Wealth of Nations”, during college, that he opined that a market-based economy must constantly expand. Is this recollection correct and, if so, ...
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2answers
48 views

a question on the endogenous growth model

I have such a question on the endogenous growth mode”: In the macroeconomics literature there are various ways in which the growth process in the Ransey-Cass- Koopmans model has been endogenized. ...
4
votes
1answer
45 views

Interpretation of the Cross Partials of the Cobb-Douglas

Consider a Cobb-Douglas Prod. Function $$Y=AL^{a}K^{1-\alpha}$$ This has the cross-partial: $$\frac{\partial^2 Y}{\partial K\partial L}=(1-\alpha)\alpha AL^{\alpha-1}K^{-\alpha}$$ Is the ...
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1answer
73 views

Sustainable growth in the long run [closed]

Suppose that, in addition to physical capital and labour, an economy requires a fixed factor and a non-renewable resource to produce the final good. Prove that an economy with these input requirements ...
1
vote
1answer
34 views

Is there objective evidence that the US economy is “booming”?

I realize that it's the political pundits that are saying it, but they never seem to provide evidence that the economy is "booming". The dictionary definition of "booming" is having a period of ...
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0answers
41 views

Social conflicts in economic growth models

I'm highly interested in theories and models which explain how do social conflicts influence economic growth. What papers on the topic can you recommend? I was searching for some seminal and most ...
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0answers
15 views

Raising the elasticity of substitution in an economy

Papers such as de la Grandville (1989) and Klump/de la Grandville (2000) have shown that a higher elasticity of substitution leads to higher economic growth. My question is, if there is a way to ...
5
votes
4answers
224 views

Can the stock market grow faster than GDP indefinitely?

My understanding of conventional wisdom is that average long-term growth of advanced economies is expected to be significantly lower than the average long-term growth of the value of the largest firms ...
2
votes
0answers
12 views

Size and influence of the regulatory/supervisory sector

I am interested in the size of what I call the regulatory/supervisory sector in Western economies. A regulatory/supervisory (R&S) activity involves either: Determining a set of rules economic ...
-1
votes
1answer
32 views

Economic impacts of Migration on the Labour Market

Many natives don't prefer foreigners taking their jobs, is it actually a bad thing for the countries economy?
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0answers
43 views

Reference Request: Primer on Relationship Economic Growth and Science / Technology

I'm in the early stages of planning a research agenda in this area, which means studying the current literature with an eye for further research opportunities. The Economics of Science and ...
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1answer
34 views

How to check whether the production function below is neoclassical or not

Say I'm given the production function of the form \begin{equation*} Y= F(K,L,A) = (\alpha K^{\epsilon} + (1 - \alpha)Y^{\epsilon})^{\frac{1}{\epsilon}} \end{equation*} Where $\epsilon, \alpha \in (0,...
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1answer
22 views

Does GNI change once it has been published?

From what I understand, GNI is published for the last year once the year has ended I am trying to have a look at the GNI for Korea for the past couple of years The official GNI is published by ...
3
votes
0answers
51 views

Does Economic Growth Lead to Inflation?

As an answer to this question, it was stated that Economists believe that higher growth rates tend to also mean higher inflation rates. As a non macro-economist, I am wondering if this is true? ...
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1answer
25 views

Disruption vs economic growth vs inflation

On the terms: Disruption is when new players earn say 1m but take over of a 100m market segment, causing damage to well established but less innovative businesses economic growth is what we read ...
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0answers
41 views

Estimating Endogenous vs Exogenous growth models

Exogenous economic growth models (mostly those that take technological progress, or change in TFP as exogenous and random) are rather easy to estimate econometrically. But how about endogenous ...
6
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1answer
77 views

The Next Breakthrough of Growth Economics

Romer has once said, that the growth economics has not had a breakthrough after his work of endogenous model of 1990's. What could somehow prove his saying is that we rarely see the theoretical ...
2
votes
2answers
72 views

How does Bolivia maintain its high economic growth and the highest direct foreign investment in South America, despite its economic policies?

Nationalization of industries has always been anathema to foreign investment yet Bolivia now has the highest foreign direct investment despite Evo Morales' policies. Also not that it is always bad but ...
3
votes
1answer
48 views

Solution method in Smith (2006) A Closed Form Solution to the Ramsey Model

I am trying to understand the way Smith demonstrates that the general solution to his equation (12) is (13) (see page 6). (12) \begin{eqnarray} \dot{z} &=& (1- \alpha)\left[1-\left(\delta +...
5
votes
2answers
69 views

Does trade lead to economic growth in the most basic models of trade?

In the standard models of trade, such as Ricardo or Hecksher-Ohlin, I know that openness to trade will lead to increased consumption as (roughly) the consumption possibility frontier expands beyond ...
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0answers
22 views

Link between economic growth and income growth

We know that economic models such as AD-AS and the Keynesian model easily explain how economic growth leads to income growth. But how does one explain in layman's terms how economic growth (a nation ...
4
votes
2answers
89 views

Reason for Economic Slowdown in Western Nations

Why do the U.S and other major Western Countries (e.g, Canada, Germany, in contrast to India, Australia, and China) have stagnated GDP growth? Comparing the GDP growth in the post-2000s from the 1990s ...
3
votes
1answer
42 views

Bernoulli transformation in “ A Close Form Solution to the Ramsey model” by Smith (2006)

I am trying to understand the way Smith arrived from (1) and (2) to (6) and (8). Could anyone give me a hint? Thank you! It is well known that the dynamics per capita consumption $c$ and capital $...
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0answers
32 views

What are some examples of places with steady state economies?

Referring to economies that over a long period of time have remained constant and not had significant growth or decline, not necessarily where this was intentional. How are they compared to different ...
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1answer
251 views

GDP versus GNP. Which is a better gauge of a country's economy size and prosperity?

Country A's GDP is larger than Country B's GDP. However, Country B's GNP is larger than Country A's GNP. Which country has a stronger economy? Which country's citizens is more likely to enjoy ...
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0answers
16 views

Question about Quantitative and Monetarist schools

What is the difference between Quantitative and Monetarist schools in terms of : - Economic Growth - Inflation - The role of money Specifically the difference between: Jean Bodin, Irving Fisher ...
5
votes
1answer
118 views

Labour-saving vs. Labour-augmenting technical change

I've read a number of posts on the above topic but none refers to published empirical papers. Google searches have been hopeless. Does anyone know of any paper on empirical derivation of technical ...
6
votes
1answer
42 views

A growth model with regime switch

I have a very general question. I am reading this paper : http://www.webmeets.com/files/papers/eaere/2015/177/Discounting-HelsinkiBlind.pdf There is a catastrophic event probability and after the ...
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1answer
148 views

Is inequality good for growth? [closed]

I was reading about the debate about income inequality and I would like to know your opinion on the matter. Basically, the positions are two: the classical one, which states that inequality is good ...
2
votes
1answer
52 views

Can saddle path not go through the origin in Ramsey model?

In my case, the utility function is CEIS and discrete, the production fuction is $f(k_{t})=k_{t}^\alpha$, the budget constraint is $f(k_{t})+(1-\delta)k_{t}=c_{t} + k_{t+1}$. I use Jacobian matrix and ...
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2answers
74 views

Is the locus of consumption in Ramsey growth model a vertical line?

In almost all documents I have read on the internet, the locus of consumption where $C_{t} = C_{t+1}$ seems to be a vertical line as shown below. However, my teacher said it could well be not a ...
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1answer
46 views

Difference between Maximum Output and Potential Output

In macroeconomics, what is the difference between potential output and maximum output? Or they are simply equivalent concepts? If they are different, how can we graph it in comparison to LRAS on AD-AS ...
5
votes
1answer
43 views

In economic modelling, how are we sure the linearized equilibria behave similarly to original equilibria?

The following problem is in the context of continuous time, although I suspect something could be said about discrete time also. Let's assume that we have the following equation: $$\dot x=f(x)$$ ...
2
votes
1answer
61 views

Was there a Role of Technology in Macroeconomic Models before Solow?

Was the role of technological progress formalised by Solow (1956) for the first time? or at least he provided the initial formal insight into the role of technological progress in economic growth?
4
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1answer
65 views

How would gross world product look like if fossil fuel is treated as capital and not as income?

The idea to treat fossil fuel as capital is found in the first chapter of the book "Small is Beautiful: (A Study of) Economics as if People Mattered" (1973) by E. F. Schumacher. Is there recent ...
1
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1answer
21 views

Discrete returns versus log-returns

I read this link and it is very helpful. However, if log-returns are easier for time-aggregation, then why do economists work with discrete returns e.g. in GDP growth?
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0answers
35 views

How to pin down the bias and its/their sources in derived technical change indices?

Using the following CES function I backed out factor-augmenting indices $A_1$ and $A_2$ using OECD country level macro data. This process is akin to Solow's (1956) method for deriving technology ...