Questions tagged [economic-growth]
An increase over time in the quantity of goods and services produced within an economy.
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Why in neoclassical growth model K* is always to the left of K gold?
In the phase diagram of the Ramsey model, the steady-state capital per capita is always to the left of the golden rule capital per capita. What does this mean? Why does this always happen?
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Where does the money go when Musk, Branson, and Bezos spend money on a private space program? [closed]
Where does the money go when Musk, Branson, and Bezos spend money on a private space program?
What countries and demographic groups have been affected positively? What countries and demographic groups ...
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What could the government do to boost GDP if inflation rises but consumer spending falls?
I don't know economics that well, but just curious what would happen in this scenario. Let's say inflation rises but wages do not increase with inflation (due to the capitalist system). Sure the ...
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1answer
23 views
Constant returns to scale and diminishing marginal returns in the Solow model
My introduction to economics course had a section on the Solow model which I'm revising for next year. I'm a little confused by two of the assumptions which our lectuer taught us are made by the Solow ...
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Idea Production Function References
I've read in growth theory about the Idea production function:
$\dot{A}=f(A,S)$
which states that the change in ideas or blueprints or patents is a function of past ideas and the number of scientists.
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1answer
53 views
Is there an economic argument against mass immigration?
(I know little about economics, so I'd appreciate an elementary explanation)
Background for this question is that I was wondering what makes people say China's economy will keep growing while its ...
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1answer
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Why does HDI use log-transformed data for income index?
For calculation of HDI, the Income Index used is $\mathrm{I_{income} = \dfrac{ln(Income) - ln(min Income)}{ln(max Income) - ln(min Income)}}$. Why is the log transformed income used here? World Bank ...
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2answers
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Does investing in the stock market contribute to economic growth?
I am morally opposed to economic growth: I think that for the good of our planet we need to be shrinking human impact in pretty much every way, not increasing it.
If I invest in the stock market, I ...
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103 views
Will economic discrepancy between democratic and authoritarian states decrease over time? [closed]
The most popular explanation for the economic discrepancy between different states is that in the authoritarian states the leaders need corrupt extractive institution to preserve their power. However, ...
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How should I regress income inequality on economic growth?
I would like to know which variables to use to regress income inequality on economic growth. For income inequality, I am thinking of using the Gini index, but don't know what measurement exactly.
For ...
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1answer
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How to get this Production Function in Growth Rates
I'm struggling to understand how Khan & Reinhart (1990) go from the next production function.
$$y=A f(K,L,Z)$$
Where $y$ is the production of the economy, $A$ is a variable which contains the ...
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1answer
54 views
Human Capital Vs TFP
I'm interested in familiarizing myself with some of the intra-debates that have occurred over the years, having to do with Mankiw, Romer, Weil (1992) and Klenow, Rodriguez-Clare (1997). Some argue ...
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Help to find China Data
do you know where can I find data about the R&D expenditure of china from 1976 until 2020?
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29 views
Is GDP the market value of goods consumed or goods produced in a time period?
Definitions across various resources state that GDP is the market vaue of all goods 'produced' in a certain time period. But while calculating GDP by expenditure method, consumers' spending is one of ...
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1answer
58 views
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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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
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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 $k/k$
$$ \dot{y} =f’(k) \frac{\dot{...
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293 views
Why is South Korea classified as an Emerging Market economy?
I have recently found out that South Korea is part of the MSCI Emerging Markets Index, and that the South Korean Won (KRW) currency trades as a non-deliverable currency. Furthermore, the South Korean ...
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1answer
28 views
Formalizing unorganized Sector
This is a fairly basic question. What are the real benefits of formalizing the unorganized sector? What does integrating these into the organized sector achieve other than maybe increased tax revenue ...
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How do I work with the growth accounting framework in a regression?
I am currently writing my master's thesis with the topic "The impact of digitalization on economic growth in China and Germany".
My idea is to take a technology such as Industry 4.0, IoT or ...
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1answer
164 views
Derivation of Surplus in Paul Romer's paper on “mathiness”
In this paper by P. Romer https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.p20151066
I'm wondering the Surplus $S$ was derived.
By using the given condition I found that $$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
40 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
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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
25 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 ...
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1answer
105 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
70 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 ...
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1answer
139 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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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
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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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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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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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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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1answer
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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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1answer
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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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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
119 views
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
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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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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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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 ...
