Questions tagged [economic-growth]

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

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how can two countries have the same level of output per capita but different levels of factor accumulation and productivity? [closed]

This is a question in my growth class on the PPT. Pretty confused by it. I tried drawing it out but have had no luck getting over this.
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Will a golden rule level of capital exist if the production function does not satisfy INADA conditions? [closed]

I am trying to think about a generalized form of Golden rule level of capital.
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Link between recession and decline in investments

I recently followed MIT online lectures for economy and I found this - one of the reason for investments decline in recession is bad expectations about economy -----> leading to Higher capital output ...
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Investments during recession

During Recession, banks loans decrease which leads to financial constraints and ultimately Investment suffers and declines. my question is - "Are loans lower because of demand or supply?" My ...
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What is the upper limit of circulating money on earth?

I've come up with this question while discussing the topic of customer-perceived value with coworker. Is there a theoretical upper limit to all circulating money in this world? To avoid inflation ...
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what can be the proxy variable for measure of product innovation?

My objective is to prove that international trade leads human capital formation which leads to economic growth. I am regressing GDP on multiple variables among which Human capital is one. According to ...
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Why growth of national income in current prices during inflation not measured in poor sections and poverty alleviation programs?

Here 1) dwindles means reduce, smaller. Here is my doubt: If inflation fluctuates how can we use the word 'dwindles', what it means here? 2) Why the growth rate during inflation not measured in poor ...
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Can't we measure the growth in the income levels of poor?

Inflation has been a challenging aspect of policymaking. In such situations growth in the income levels of the population living below the poverty level can never be measured accurately (due to ...
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Derive the growth rate of an equation

I have the following equation: $$\mu =\left [s_{\pi }-v(s_{\pi }-s_{W})+\zeta \right ]$$ And I have to derive its growth rate, which is: $$\dot \mu =-\frac{v}{\mu } (s_{\pi }-s_{W})\dot v$$ Do ...
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Hep with total differentiation of an AD function [closed]

Is there anyone who can help me with a total differentiation exercize. I am starting with the following formula for AD: $$x=\mu ^{-1}(g+i+e)$$ Where $\mu$ is the Keynesian multiplier. And have to ...
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What are the factors on which value of all resources ( good, silver, cash land etc. ) found in world changes over time?

And followed by, Does it right to say that, if any country become rich then other must become poor and vice-versa. If no, then Is it possible that, in certain conditions, all Nation in the world can ...
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Which assets beat the injection of money and why?

Suppose a world in which every year $1.03 ^ Y$ liquidity is injected. Which assets could perform better than 3% per year? Growth forecasts for these?
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Yield curve inversion and recession

Yield curve inversion is often a sign of a looming recession, but is there an explanation of this phenomenon other than the fact that historically we have seen that the two phenomena were indeed ...
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Solow Model with a Capital Stock Externality

Suppose we have the following form of the Solow Model: $$ Y_t=K_t^{a+b} L_t^{1-a} $$ where a,b >0, and a+b<1. Is it possible to determine the steady state growth rate of k (k=K/L), and the steady ...
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Is a proft tax not distorting unless we know the opportunity cost?

A Profit tax where we actually know the Entire Cost Function Including the Opportunity cost(Time, Incommodation, best alternative for the easily monetized resources etc) is not distorting. But the ...
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The rationale for using a lagged variable to address endogeneity arising from simultaneous causation?

when there is simultaneous causation between dependent and independent variables often in papers we see a lagged variable being used in place of contemporaneous variable. For example, Clemens, ...
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If an endogenous explanatory variable is serially correlated does it mean that its lags are also endogenous?

in panel data when examining economic growth determinants lags are often used to account for endogeneity of explanatory variables. However if the explanatory variable is serially correlated, does it ...
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What is the interpration of results if adding or subtracting a control variable effects the significance of explanotary variables?

I am conducting some regressions on economic growth determinants and I am disillusioned. Essentially by choosing what groups of variable to regress I can get the desired significance. What does this ...
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What is the relationship between economic growth and equality?

Does economic growth create more or less equality?
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Is it reasonable, in panel data, to use past values of explanatory variables as instruments to deal with simultaneous causality?

I am trying to examine the determinants of economic growth, essentially regressing a number of variables upon economic growth. I face a problem that there is likely simultaneous causality between many ...
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Israel as an Asian Tiger

The Asian Tigers are Asian countries who underwent rapid industrialization and maintained exceptionally high growth rates in the second half of XX century. The question is: are there any objective ...
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Maximizing units under a budget constraint and increasing costs

Consider two columns. Column A has total cost per day, Column B has units bought that day. The marginal cost of each unit is increasing because of limited supply. My goal is to estimate total ...
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Do patents foster innovation?

I'm looking for a good meta analysis which answers the question if patents are generally beneficial to economy or not. Some papers I've read claim they are indispensable, other say it depends on the ...
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Has there been an applications of search and matching theory in the Neoclassical Growth Model?

Specifically, I am looking for the standard neoclassical growth model, but the labour decision is based on either search or matching theory instead of a Walrasian labour mechanism.
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What is low unemployment and low gdp growth symptomatic of?

Obviously there are caveats with GDP, if you build a bridge to nowhere it counts as GDP, but if you mow your own lawn or volunteer to pick up garbage it doesn't count, and so forth and so on. However, ...
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Typical Growth Model Social Planner Problem

Consider the following social planner's problem, hand-waving the usual assumptions on the preference, technology, endowment, and inelastic supply of labor: $V(k_o^*)= max_{\{c_t,k_{t+1}\}_{t=0}^{\...
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Growth Model Choices

In a typical macro growth model, a set-up usually concerns with the following trade-offs or choices to be made in each $t$: (1) $c_t$ v. $c_{t+1}$, consumption today versus tomorrow. (2) $c_t$ v. $1-...
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Beta convergence: data uncertainties

Maybe these questions are silly for many of you but I’m trying to conduct a beta convergence analysis using data from the Penn World Table, and I have run into some uncertainties. For the dependent ...
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If every company in the economy earns zero economic profit, can they contribute to real economic growth?

I understand that zero economic profit does not equal to zero accounting profit. It means that every resource that goes into the production is perfectly utilized considering alternative uses in the ...
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Is there any mainstream criticism of the Benes-Kumhof conclusion that the Chicago Plan would improve the US economy nowadays?

A 2012 IMF Working paper by Benes and Kumhof "The Chicago Plan Revisited " has this abstract, finding in favor of the Chicago Plan an all counts basically: At the height of the Great Depression a ...
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The economics of a “no deal” Brexit

A "no deal" Brexit is presented in negative terms. In such a scenario the UK would set tariff schedules in line with trade strategy and protect domestic industry/agriculture with tariff rate quotas. ...
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Are there any studies, academic papers or articles that defy “common” knowledge", i.e that patents give an incentive for R&D to private business?

In Economic Growth and particularly dynamic optimization. My professor taught us that an intertemporal allocation is a dynamic optimum(Pareto Optimum) only if(necessary condition) at any given ...
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Are there economic models that predict (only) a medium/long-term negative effect of protectionism?

Going by some ECB models/estimates from last year, protectionism would result in negative consequences pretty fast, e.g. For illustration, I will use the results of simulations carried out by ECB ...
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Does migration exacerbate (albeit delay) the problem of aging, economically-inactive populations in Western societies?

As a layman, I've always understood that there is a general consensus amongst economists that "immigration is economically beneficial" to rich Western countries (like Britain) who have aging ...
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How long did it take before the Hawley–Smoot Tariffs reached their peak effect on US growth?

I understand that this may still be a contentious issue, but are there some estimates how long it took before the Hawley–Smoot Tariffs impacted US growth significantly and/or how long it took for them ...
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What is the difference between a growth shock and a productivity shock

In a RBC context, what I mean by growth shock is a total factor productivity shock that follows a stochastic trend $ln(a_t) = ln(a_{t−1}) + \gamma + \epsilon^a_t$. I.e. the technology $a_t$, has a ...
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How exactly does removing labor​ market rigidities reduce structural unemployment and increase potential output in an economy?

Here I want to focus primarily on the potential benefits of labor market reforms such as a reduction in job security and trade union power and not their controversies. I wish to learn a few thoroughly ...
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[Graduate Macro]Land in the Economic Growth Model: CES Function

I am an undergrad student trying to study grad macro. I have been trying to solve exercise problem in Barro's economic growth. The model is about adding land in the Ramsey Model. The model goes as ...
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The maximum sustainable yield model: clarifications

I would like your help to understand the Maximum sustainable yield model. This is what I understood with some questions. We consider a population of individuals who are born, possibly reproduce ...
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Different explanation for economic growth, depending on the length of the period considered

I'm being introduced to macroeconomics, and a colleague asked why do we say that in the short term the productivity of a country is determined by the "demand side" (IS/LM model) while in the long run ...
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Equity and increase in sales

I am reading this book shoe dog by phil knight. There is mention of equity in one of the pages where the banker says *Your rate of growth is too fast for your equity * It is very confusing. From ...
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Why is an inverted yield curve NOT a good predictor for recessions except in the US?

I am trying to better understand the mechanism (if there is one) behind an inverted yield curve predicting - or causing, as some would argue - a recession. In order to do that, I'm trying to ...
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Stock market's obsession with growth of all companies?

I understand the stock market is a useful place to gain capital which allows further growth of a company. But it seems to me that even companies that have been on the stock market a while, appear to ...
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What are some common causes of jobless growth?

While "jobless recovery" is often discussed in the aftermath of recessions in Western countries, it seems it's always a short-lived phenomenon. On the other hand, it looks like in other parts of the ...
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Global stability in a ramsey growth model with multiple equilibria

Let's say that we have a model with multiple equilibria. $c$ refers to consumption and $S$ refers to natural capital stock. The dynamics that describe the economy are as follows: $$\dot{S}\left(t\...
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Predicted recessions that never happened

It seems generally accepted that recessions are hard to forecast, in both onset and intensity, but the bias seems to be toward rosy outlooks: The main finding is that, while forecasters are ...
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Is weak global economy always a “headwind”?

In the most recent (Mar. 20, 2019) FOMC Press conference, Powell said this: So, global economy was a tailwind for the United States in 2017. That was the year of synchronized global growth, and ...
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Overlapping Generations model: Social Planner solution

Assume we have a model of OVG where there are 2 overlapping generations, youngs and olds, the agents are two period living. The utility function is logaritmic, and the production function is Cobb-...
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Here's a question about the solow model [closed]

At first, I was confused by how y keeps increasing after depreciation exceeds savings, then I finally found what was truly bothering me. The fact that when depreciation exceeds savings, capital per ...
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Does brain drain really affect a nation's growth trajectory?

Take India as an example. India has been losing most of its bright minds to the west. India also ranks low in development. I would like to get a definitive answer to this cause-effect type question. ...