Questions tagged [economic-growth]
An increase over time in the quantity of goods and services produced within an economy.
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Introduction the economics [closed]
firms in perfect competition produce the productively efficient output level in the short run and in the long run. Is it true or false?
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Measuring growth rate when values are negative
I am studying nightlights data and trying to model cross-sectional convergence in nightlights in India. However data has some stray light corrections, which has made some of the measurements below ...
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35 views
Solow model - max steady state output per worker vs max steady state consumption per worker
$$Y=K^{1/3}G^{2/9}(AL)^{4/9}\\\frac{\dot{A}}{A}=\frac{\dot{L}}{L}=0.01\\\dot{G}=tY-0.03G\\\dot{K}=0.2(1-t)Y-0.03K$$
So far, we have a system that shows a basic Solow model with public and private ...
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Neoclassical Two-Sector Model of Endogenous Growth: Getting the consumption growth rate
I'm struggling to derive the growth of consumption from a two-sector model with the traditional Cobb-Douglas function. The model I am speaking about incorporates the fractions used by physical and ...
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1answer
25 views
Transitional Dynamics of consumption per capita in solow model
I can write the transitional dynamics of output per capita as follows
$$y=f(k)$$
Take its derivative with respect to time t
$$ \dot{y} =f’(k) \dot{k}$$
Divide it by $k/k$
$$ \dot{y} =f’(k) \frac{\dot{...
2
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1answer
53 views
Why is South Korea classified as an Emerging Market economy?
I have recently found out that South Korea is part of the MSCI Emerging Markets Index, and that the South Korean Won (KRW) currency trades as a non-deliverable currency. Furthermore, the South Korean ...
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1answer
28 views
Formalizing unorganized Sector
This is a fairly basic question. What are the real benefits of formalizing the unorganized sector? What does integrating these into the organized sector achieve other than maybe increased tax revenue ...
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29 views
How do I work with the growth accounting framework in a regression?
I am currently writing my master's thesis with the topic "The impact of digitalization on economic growth in China and Germany".
My idea is to take a technology such as Industry 4.0, IoT or ...
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1answer
155 views
Derivation of Surplus in Paul Romer's paper on “mathiness”
In this paper by P. Romer https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.p20151066
I'm wondering the Surplus $S$ was derived.
By using the given condition I found that $$q_0=m^{-\tfrac{1}{a+b}}N^{-\...
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Regression based on the Solow Model
If we have the following regression based on the Solow model:
log(yi) = β0 + β1 * log(si) + β2 * log(ni + gi + δi ) + ei
And we know that based on:
y* = 〖(s/(n + δ + g))〗^(α/(1-α))
log(y*) = α/(1-α) * ...
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1answer
36 views
Is this a total derivative - if yes, why minus
This is the beginning of the derivation of equation of motion from the Solow model (Romer, 2019):
My question is: is this the total derivative (w.r.t. ultimate source of change "t")? If yes,...
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1answer
40 views
What was the cause of the decline in remittances sent to Pakistan between 1982 and 2000?
I am trying to find out what caused the 2-decade long decline in remittances as a % of GDP. I have spent an hour trying to search for explanations but haven't found anything. I know its a long shoot ...
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1answer
40 views
How can the GDP's growth rate be positive, when the GDP decreases?
I have question about following charts in Mozambique. Here is GDP of Mozambique in 2010-2016 - https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2019&locations=MZ&start=2008. You can ...
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1answer
24 views
Resolution - Ramsey growth model with per capita variables
Let's say that we have the sum of the utility of a social planner
$$\int_{0}^{\infty}U\left(C\right)e^{-\rho t}dt$$
where $C$ is the total consumption. If we want to write this by a per capita ...
3
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1answer
104 views
If protectionist policies hinder economic growth, why do we need border taxes at all?
I understand that free movement of labour and goods are a net positive for economic growth, and protectionist policies, which would make exports and imports harder would not be.
But if this is the ...
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1answer
53 views
What would happen in a modern economy if growth plateaus?
According to a Wikipedia article on a United Nations report,
The UN Population Division report of 2019 projects world population to continue growing, although at a steadily decreasing rate, and to ...
3
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1answer
63 views
Empirical justification for a constant-returns-to-scale production function in the Solow model
I am currently learning the Solow model of growth, where a constant returns to scale production function for the economy is assumed. I realise that the assumption makes further analysis much simpler, ...
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1answer
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Why doesn't stock market help to boost the economic growth directly?
For example, during the recession, the central bank often goes to buy financial instruments that are riskier than government bonds (such as corporate bonds)- which is called "quantitative easing&...
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6answers
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How can the stock market keep growing indefinitely?
It sounds like a dumb question, but there is only so much money in the world. Assets can grow, but money can only be printed. So if there is 400 trillion dollars worth of money in the world, and the ...
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2answers
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Is investment in real estate a real investment?
In the book The Financial Crisis and the Free Market Cure in chapter 3 author said that investment in real estate is not really investment.
It is jobs that create ...
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Could you guys recommend lecture notes or papers that show the step by step of the uzawa-lucas growth model?
I have to study the differences between the model of uzawa-lucas, solow and harrod-domar, so if you guys could reccomend me something to study the uzawa-lucas model, with an easy lecture notes to ...
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1answer
40 views
Models with Learning by Doing and Knowledge Spillovers - Barro, Sala-i-Martin (2003)
Consider the model of endogenous growth with learning by doing and knowledge spillovers presented in Barro & Sala-i-Martin (2003), chapter 4, section 4.3, starting in page 212. In equilibrium, the ...
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Theoretical economy calculation of closed country
Is there any well-known theoretical solution to the problem as described below? I am considering an ideal very simplified case.
There is a closed country/community of N people. All people are working. ...
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When is the upward economic convergence in the EU estimated to happen?
Although the regional cohesion, i. e. the socio-economical convergence of the East and the West has been one of the EU's main goals, some economists seem to dispute there's any evidence for them being ...
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1answer
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Why, theoretically, is economic growth exponential? [closed]
Despite the experimentally well-observed exponential nature of GDP growth, I've never actually seen a theoretical reason or "prediction" why it should be so.
(Even if the answer is "...
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1answer
25 views
Are business cycle fluctuations usually studied in a (New Keynesian) DSGE model, or can they also be studied in a growth model?
I wonder if business cycle fluctuations are usually studied in a (New Keynesian) DSGE model, or can they also be studied in a growth model?
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1answer
40 views
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 ...
2
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1answer
37 views
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 ...
0
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1answer
27 views
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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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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1answer
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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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1answer
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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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1answer
41 views
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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4answers
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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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2answers
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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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2answers
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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
74 views
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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3answers
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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 ...
2
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1answer
82 views
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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3answers
131 views
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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1answer
34 views
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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22 views
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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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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1answer
29 views
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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0answers
54 views
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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0answers
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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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0answers
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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:
$$\pi=\frac{\kappa\phi_y}{(1-...
2
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1answer
87 views
Log linearising EUler equation
I am trying to solve a problem that asks to log linearise following Euler equation of the New Keynesian model:
$$C^{-\sigma}_t=\beta E_tC^{-\sigma}_{t+1}(1+i_t)/(1+\pi_{t+1}).$$
The solution is ...
