Questions tagged [economic-growth]

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

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How to determine a corner solution? Growth Model

I'm working on a paper called "Fertility clubs and economic growth" of Ahituv and MOav (linked below) and arrived at this point: The paper shows three optimal conditions respect to ...
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AR(1) in Discrete Version of Stochastic Growth Model

If I assume a stochastic growth model in discrete time and the production function is defined as $F(K_{t}(s^{t-1}), L_{t}(z^{t}))$ where $z^{t}$ is history of the technological shock up to time $t$. A ...
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Calculating Per Capita

This is in reference to https://fred.stlouisfed.org/series/M2 My question is how can i calculate the M2 value on per capita basis? Do i just divide it with the population by year?
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Why don't more software/SAAS companies give “one-year trials”? [closed]

Every time I want to do anything, no matter how "minor" and "insignificant" I consider it to be, I always find dead FOSS projects and then at least one "commercial alternative&...
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Derivation for population growth rate formula? Given by r = 100 ln (P2 /P1)/(t2 -t1) [closed]

(a) Name: Population growth rate (b) Brief Definition: The average annual rate of change of population size during a specified period. (c) Unit of Measurement: Usually expressed as a percentage. The ...
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Is there contradiction between ''job creation“ and ”growth" as implemented by automation?

Joint goals of job creation and sustainable growth are the main goals of majority of EU funding schemes. E.g. European Innovation Institute explicitly states in its mission https://eit.europa.eu/who-...
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Neutral technical progress

Recently I learnt that Cobb-Douglas production function has elasticity of substitution equal to 1, therefore it has neutral technical progress. Then Leontief production function has zero elasticity of ...
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Theory behind financial flows not going to the most developing nations even though they have the highest growth rates

I remember reading a bunch of articles on this a few years ago, but I can't find any of the references any more. It has been a while since I looked at this, so here is a rough paraphrase of the ...
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Does Direct Benefit Transfers make an economy poorer?

Printing money and giving to the poor causes inflation. Increases demand and hikes prices. This is basically certain. But on the contrary, a paper titled Debunking the Stereotype of the Lazy Welfare ...
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Why do we need to “get the economy moving again”?

Sorry I have no background in economics but as a computer programmer, I specialise in building models out of simple math and logic, so I hope we can speak the same language without having to get into ...
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How can people save in a equilibrium economy?

Two people on a desert island: John produces 100kg potatoes and sells them to Paul for \$100. Paul catches 100kg fish and sells it to John for \$100. GDP is \$200\$, right? Next year, they improve ...
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“If markets are competitive, the rate of return on capital equals its marginal product, $f'(k)$ minus depreciation $\delta$”?

Consider Solow model with $Y=(AL)^{1-a}K^a$. Then output per effective labor is $y=k^a$ where $k=\frac{K}{AL}$. "If markets are competitive, the rate of return on capital equals its marginal product,...
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Is there any fundamental reason that output elasticity of capital $<1$ in general?

In Solow growth model, if one perturb the saving, there is convergence of old equilibrium capital to new equilibrium capital as investment breaking point capital is attractor. However, in derivation ...
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In Solow growth model, increasing consumption drops production which should measure GDP?

Consider Solow growth model $Y=F(K,AL)$ where $A$ measures knowledge progress, $K$ is capital and $L$ is label. I have suppressed temporal dependence. I am going to assume $L$, $A$ grow exponentially ...
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1answer
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What is the relationship between population growth and economic growth?

Population Growth is only one of several factors of influence on economic growth but it is not strictly necessary for the economy to grow. I have also heard of the term called the population bonus - ...
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Proving a result In Jones (1999) “Growth: With or Without Scale Effects”

Jones (1999) builds his semi-endogenous growth model where output is produced with only one input, labour, in the following "research" function: $$ Y = A^\alpha L_Y $$ Labour is augmented with ...
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Research question formation

I am in the process of starting a research paper (for those in the IB Board, this is the Extended Essay) and I had previously formed my research question like this: To what extent will factor x ...
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Where the economic growth of a society come from?

I'm thinking about value generating. I hear it a lot in a innovation context, i.e. one should create a new product that a lot of people want to buy. I can see how a new product can value more than ...
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Is the steady state of k enough to show Y grows at the rate n+g?

To provide some context for the question: I was approached by a student needing help for a an empirical thesis based on Solow-Swan model. She had trouble solving the theoretical model she wanted to ...
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Calculating real wage in the previous year?

If in the base year the real wage is $.489, inflation in previous year was 5.8% and total wage growth was 13.5%, what was the real wage one year ago? I know at the base nominal wage = real wage. Thus,...
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Replicating a Fertility Choice Model

I'm working on the Ahtiuv&Moav work of fertility choice and economic growth. When I want to maximice the main problem I can not do it because I dont know which mathematical tool I should use. ...
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Implications for Labour after a Productivity Shock, RBC Model

I am trying to understand the implication for labour after a one time productivity shock where $A_t$ follows a AR (1) process with persistence $\rho_A=0.95$. It is stated the following : labour ...
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Wage Growth Rate in the R&D Model

I am trying to understand the R&D model and how to calculate the growth rate of wage in this model. There is no equation given, but it’s stated that : household income must equal total ...
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Ramsey Model and Transversality Condition

I am trying to understand the intuitive interpretation of the TVC. I have two expressions from two different household optimisation problems that should be actually similar or equal intuitively as ...
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How do I convert change over a ten-year period into annual growth rate?

I am working on an econometrics project where I need to find the impact of climate change on agriculture in India. The project requires me to use an existing econometric model from some peer reviewed ...
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New Keynesian Model Output Gap and Calibration

I am trying to solve following problem regarding the New Keynesian Model: So, I have calculated following equations by using the Taylor Rule, Phillips Curve and IS Curve: $$\pi=\frac{\kappa\phi_y}{(1-...
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Log linearising EUler equation

I am trying to solve a problem that asks to log linearise following Euler equation of the New Keynesian model: $$C^{-\sigma}_t=\beta E_tC^{-\sigma}_{t+1}(1+i_t)/(1+\pi_{t+1}).$$ The solution is ...
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Elasticity of substitution, marginal rate of substitution and price ratio

so there is a problem I do not know how to tackle: The is an utility maximisation problem and the solution to the Lagrangian leads to:$$\frac{C_1}{C_2}=(1+\rho)^\frac{1}{\sigma}(\frac{P_1}{P_2})^\...
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Endogenous Growth in the case of externalities (Learning by doing)

so for the Learning by doing model productivity is defined as $$A_t=BK_t$$. Inserting this into the optimum conditions leads us to the following:$$r_t=\alpha BL^{1-\alpha}$$ and $$w_t=(1-\alpha)B^{1-\...
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Ramsey Model Market Clearing Condition

I have a problem understanding the market clearing condition for aggregated equilibrium in the Ramsey model. Market clearing implies that all resources are used up, hence: $Y_t=C_t+I_t$ , where $Y_t$ ...
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Difference between Luxury/Premium/Value fashion segments? What does “value” mean here?

I was reading this article on Quartz: https://qz.com/1485141/just-20-fashion-companies-are-making-almost-all-of-the-industrys-profits/ I do not understand the following graph shown: What does "value"...
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FDI - Foreign Direct Investment

If in the sector foreign direct investments (FDI) are not stable, for instance, increasing dramatically in one year, decreasing next year. fluctuation continues over ten years, what FDI can say about ...
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Does the US Bureau of Economic Analysis use the generic growth formula to calculate percent change of GDP?

My question is so basic, I'm embarrassed to ask it. (I study computational theory, not economics.) I'm looking at quarterly GDP numbers and growth rates. I've tried to arrive at the BEA's CPGDPAI ...
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How can autonomous private spending change budget surplus?

I was reading Keynesian economics in R.Dornbusch's book where he mentioned the defects of using budget surplus as a measure where he says it can be changed and effected by autonomous private spending ...
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Which model gives a more accurate representation of growth?

Does the Solow model or the combined Romer - Solow model give a more accurate representation of growth?
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Interaction between productivity growth and interest rates

Isabel Schnabel, Member of the Executive Board of the European Central Bank point at the interview out "The real interest rate (...) emerges from the economy’s growth potential in the long run.“ https:...
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Equilibrium in currency devaluation?

In export oriented Economy, we often come across currency devaluation as means to boost exports. As per my understanding (please correct me if I am wrong), currency devaluation will immediately bring ...
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Macroeconomics for Mathematicians

I'm coming from a math background (so my mind is set up for Definitions-Observation-Lemma-Proof frameworks) and looking for recommendations of a Macroeconomics textbook mainly devoted to growth models ...
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Understanding GDP vs Real GDP

I am totally new to Economics. I have issues understanding GDP and real GDP. I have listed 3 statements below, can someone tell me if those makes sense ? GDP Gross Domestic Product is used to get an ...
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When does increasing government spending lead to economic growth and when does it lead to stagflation?

Obviously increasing government spending endlessly will lead to inflation. What I ask is: when can an increase in government spending, when the economy is in a recession, lead to economic growth ...
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Regarding global economic slow down

I heard in news that world is going through,the economic slow doing may be because of us China trade war or any other reason. and India is one of the country which affected by this slowdown, but ...
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Steady state growth of output

In the long run Solow steady state, the growth rate of output in a country is g + n. If there is some other country with exactly the same properties of the first country and the same initial ...
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Would a zero-growth economy with zero-growth population still have the same GDP?

If a country was to turn to a steady-state economy (or circular economy) where there is neither economic nor population growth with time, and there is no natural resources being added to the system ...
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In the long run, would a production-possibility curve expand outward if the country preferred more consumer goods than capital goods?

PPC will not expand outward if the country preferred more consumer goods than capital goods. The total amount of resources in an economy at any given point of time is fixed. If a country ...
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What would happen to the world GDP if we run out of minerals to mine but not of sources of energy?

I was thinking about how the depletion of minerals (metals and all material we mine from the Earth) will affect the GDP of the world. I read somewhere that at the current extraction rate, we will run ...
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Does ownership determine efficiency in an economic system?

what determines efficiency in an economic system? a) ownership b) competition c)both d) none I am confused between option (C) and option (B) because I am not sure about whether ownership can be said ...
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How would increase labor productivity lead to improved living standards of people in an economy?

I would like to know more about the mechanisms through which higher labor productivity would translate into higher living standards for a population in a given economy.
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Solow growth model on firms level

Probably a silly question, but I just have to make sure. I am wondering whether it is acceptable to use the solow / solow-swan growth model to model the growth of firm instead of growth of an economy?
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What is the difference between Q4/Q4 and Y/Y GDP growth?

Per US media, the US economy grew 3.1% in 2018 Q4/Q4 and 2.9% in 2018 Y/Y. 2.9% seems the reference number in various databases (World Bank, Reuters, Bloomberg, etc) but what exactly does Q4/Q4 mean ...
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Is Botswana an industrialized country?

Is Botswana’s strong mining industry sufficient to consider the country as an industrialized economy?

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