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Questions tagged [economic-growth]

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

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15
votes
5answers
4k views

How do economies grow?

These days, we hear again and again about the so-called "need" for economic growth. But how do countries actually grow economically? That is, why/how does their GDP increase over time? Related, what ...
11
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2answers
969 views

Inflation and economic growth

Noticeable works about the impact of inflation on economic growth are dated back to the 90s. For example, Barro (1995): the impact effects from an increase in average inflation by 10 percentage ...
10
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1answer
342 views

Are there fundamental reasons why (exponential) economic growth is highly desirable?

One of the most widely published measures of the economy is the economic growth as a % of the GDP; i.e. the degree to which an economy grows exponentially. In my understanding, when the rate of ...
4
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1answer
82 views

Multiplicative factorization of stochastic growth time series--solving for an eigenfunction/eigenvector

I'm trying to understand the tools used/presented in Lars Hansen's Econometrica paper "Dynamic Valuation Decomposition within Stochastic Economies." In a part in the paper, Hansen introduces a long-...
21
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2answers
3k views

Should we expect more structural technological unemployment if growth becomes more limited by natural resources and less by labour?

Technological unemployment, where unemployment arises from (with some oversimplification) workers being replaced by machines, has so far been temporary as new jobs were created that replaced the old ...
18
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5answers
2k views

Why are real median household incomes stagnant?

This image shows US real median household income. It seems remarkable for its lack of growth over the last 20 years. This has been the subject of much political debate (around the "1%" and "occupy ...
9
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4answers
3k views

Why is economic growth measured exponentially rather than linearly?

If economic growth is indeed highly desirable (see this question), why must this growth be exponential? With finite resources, exponential growth might hit limits rapidly (or be impossible?). Why not ...
8
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1answer
379 views

Is indefinite exponential economic growth possible?

Economic growth is frequently expressed as a % of GDP. Proponents of a steady-state economy postulate that perpetual exponential economic growth is impossible and that any system relying on it is ...
4
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1answer
5k views

How is wealth created? [duplicate]

The production of 'goods and services' and 'innovation' is the usual answer. I feel that doesn't really answer the question. These things can be traded for wealth but they don't generate new wealth. ...
3
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4answers
797 views

What is the relevance of economic growth?

Economic policies often mention high economic growth as a desirable path. For example, "We started to lay a new foundation for stronger, more durable economic growth." -- President Obama, ...
7
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2answers
126 views

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 ...
3
votes
5answers
323 views

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. ...
17
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3answers
549 views

When Optimal Control fails (?)

In order to "ask my question", I have to solve a model first. I will omit some steps but still, this will unavoidably make this post very long -so this is also a test to see whether this community ...
13
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2answers
4k views

Larry Summers on the causes of secular stagnation

In an influential speech on November 8, 2013 at the IMF Annual Research Conference, Larry Summers suggested that slow economic growth in the years following the 2007–2008 financial crisis might be due ...
11
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2answers
11k views

Solow Model: Steady State v Balanced Growth Path

Okay, so I'm having real problems distinguishing between the Steady State concept and the balanced growth path in this model: $$ Y = K^\beta (AL)^{1-\beta} $$ I have been asked to derive the steady ...
5
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4answers
327 views

How is money created?

This might seem like a really simple question, but I am really troubled by it on a macro scale. The money has to come from somewhere. Someone might start up a business that creates things or takes ...
5
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1answer
2k views

Infinite Horizon Transversality Condition

This question is an extension of Endogenous Growth: Balanced Growth Path with CRRA Utility however, this question asks about a specific concept used in that question, and I think it would be helpful ...
4
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2answers
1k views

Steady state Solow model with exogenous technological change

Consider the following question: So, assume the standard function for production: $$Y_t = A_t K^\alpha_tL^{1-\alpha}$$ where $L$ is fixed. Then, the growth rate of output is: $$g_Y \approx g_A + ...
3
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3answers
3k views

Alpha interpretation in Solow growth model

Consider the Solow model (without technology): $Y = F(K, L) = K^\alpha L^{(1-\alpha)}$ What's the economic interpretation of $\alpha$? Prove and argue the result. I see it as a share that ...
7
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5answers
3k views

Does Inflation Make Money Eventually Worthless?

I used this calculator: http://www.buyupside.com/calculators/inflationjan08.htm to estimate the future worth of 100 dollars in 100 years at 2% inflation. Does this really mean that a decent meal at a ...
5
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2answers
136 views

What are some growth theories that are considered the most correct at the moment?

In under grad intermediate macro classes they often teach the Solow model. While intuitively it makes sense, it seems like it no longer is really taken seriously anymore (I could be wrong). From my ...
4
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1answer
429 views

Endogenous Growth: Balanced Growth Path with CRRA Utility

I've got a model of endogenous growth due to spillovers. $\textbf{Model:}$ $$K_t=\frac{1}{n}\sum_{t=1}^nk_t$$ In this model, $k_t$ is chosen by agents, and $K_t=\bar{k}_t$ (the average of all $k_t$). ...
0
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1answer
23 views

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 ...
5
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2answers
170 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 ...
4
votes
1answer
67 views

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 ...
4
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6answers
3k views

Can an economy grow without its population growing?

Assuming natural resources are not a limiting factor, can a country's economy keep growing if the country's population is not growing? What about the global population?
4
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2answers
900 views

What Is the Economic Meaning of “Structural Reforms”

I see tweets like this a lot: Poor 2q growth shows its not just a "1q curse". Cannot ever cause eco recovery thru just #QE, low interest rates. #StructuralReforms They seem to be saying ...
3
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2answers
170 views

Currency Values, Developing Economies and Balance of Trade

For a developing economy like India, where balance of trade is negative, is it good to have a weak dollar or a strong dollar? Dollar value increases (Rupee, the local currency, weakens), imports (...
3
votes
1answer
37 views

The Effects of Demonetisation

I do not wish to get into the details of the Demonetisation implemented by the Indian Government on 8th November, 2016. Endless political debates have already been conducted advocating or berating ...
1
vote
1answer
62 views

Which measures are there to evaluate a country economical development? [duplicate]

I'm familiar with the measures of Gross domestic product (GDP PPP) total, per capita and GDP nominal total and per capita. But I'm not sure if these measures evaluate the economical development of a ...
0
votes
2answers
66 views

Question on Central bank loss function interpretation

How do you interpret this central bank’s loss function: $$L(\hat x, \pi)=\alpha \hat{x}^2+(\pi-\pi^T)^2$$ where $\alpha >0$ and $\hat x$ is output gap. Phillips curve is $\pi = \theta \hat{x}+\...