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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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Is there a formalization of the 'broken windows fallacy' that discriminates wasteful economic activity from useful?

If I pay someone €100 to dig a hole, and they pay me €100 to fill it back up, GDP will (seemingly) grow by €200, making this seem good for the economy. "Aha!" says the economist, "that'...
Jumboman's user avatar
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Derivation of the Ideal Price Index

I'm studying Chapter 15 of Acemoglu's growth book, which is about skill-biased technological change. The unique final good is produced in perfect competition by combining the output of the two ...
Maximilian's user avatar
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Origin of terms Harrod neutral, Solow neutral and Hicks neutral

I just looked for the same question on the exchange but I didn't find anything, I even tried to look for the answer on Google but it seems it's not present. Could someone give me the origin of these ...
Pepus's user avatar
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Social Planner vs Representative Household

Is there any difference between solving the social planner's problem or the representative household's in the Ramsey-Cass-Koopmans model? The social planner chooses a plan $\left\{c_t, l_t, k_{t+1}\...
bruno's user avatar
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Why does Argentina GDP per capita relatively declined in the last 100 years?

I would like to know if there is an academically well accepted theory on this question. I know 3 'hand-waving' explanations: It was rich in the past indeed, but with a small population. It was a kind ...
Claudio Saspinski's user avatar
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1 answer
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Why is economic rent not seen as a market failure?

Economic rent seems to be behind rising inequality and stagnating growth (Stiglitz, 2016) arguing that a wealth residual explaining both declining capital and labour shares in national income is ...
Victor Nielsen's user avatar
2 votes
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What are some papers on cyclical poverty trap?

I am interested in the poverty trap models. Dynamically speaking, the model must exhibit multiple equilibria, as described in the below figure. (source) I have seen many models that can formulate the ...
teddi's user avatar
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What would happen if we had decreasing returns to scale in the solow-swan growth model? Would there still be a steady state and perfect competition?

I understand with IRS we have explosive growth and a single firm would eventually dominate the market since MC < AC, and hence P < AC, so firms would leave the market. I am struggling to find ...
georgetbarber's user avatar
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Ramsey model and the steady state

Following Barro's book about the Ramsey Model, when we work with variables expressed in units per effective labor we end up with the following system of 2 differential equations \begin{equation} \frac{...
Maximilian's user avatar
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Labor augmenting technological progess and its relevance

Can you provide a proof showing why balanced growth requires technological change to be labor-augmenting in the neoclassical growth model?
Dimitru's user avatar
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Derivation from Solow-type neoclassical growth equation?

In Chapter 6 of the 12th edition of "Economic Development" by Michael P. Todaro & Stephen C. Smith, an equation is introduced to illustrate the consequences of rapid population growth, ...
David Roberts's user avatar
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Global Asymptotic Stability in the Solow Model - Rigorous proof

Consider the (simplified) Solow equation, which is a first-order non-linear difference equation: \begin{equation} k_{t+1} = sf(k_t) + (1-\delta)k_t \end{equation} where $s$ and $\delta$ are two ...
Maximilian's user avatar
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Data on average annual hours worked by persons engaged

In Penn World Table 10.0 (source: https://www.rug.nl/ggdc/productivity/pwt/pwt-releases/pwt100), the avh (average annual hours worked by persons engaged) figures are missing for many countries. Where ...
farruhota's user avatar
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How can I replicate the Kaldor facts?

I have just started to do economic research and I was asked to replicate the Kaldor stylized facts. But I've encountered some problems; specifically, I don't know how I can find such data: For the ...
Ludwig Gershwin's user avatar
3 votes
1 answer
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Marginal and Average Cost in the Romer Model of Endogenous Growth

On page 124 of David Romer's Advanced Macroeconomics (5th Ed), he mentioned that for the Romer model, Because firms producing final output face constant costs for each input and the production ...
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Question regarding math rules for fractions and exponents when isolating variables of interest

I'm working with growth models in a course, and keep stumbling into this when trying to isolate variables of interest. I have a formula $y^*=AL^{\alpha-1}$ and I want to isolate $L$ in this expression....
Daniel's user avatar
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1 answer
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From the Transversality Condition to Initial Consumption

Suppose we have a discrete time neoclassical growth model with CRRA utility where we solve $$\max_{\{c,k\}_{t=0}^{\infty}} \sum_{t=0}^{\infty}\beta^t \frac{c_t^{1-\sigma}-1}{1-\sigma}$$ $$\text{st. } \...
Joseph Basford's user avatar
1 vote
1 answer
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Diagnostic tests on models using panel data

I am trying to replicate Islam(1995) Convergence model for EU countries. I know that LSDV estimator is biased,however i have applied it in order to compare the results with other methods. My question ...
kostas2323's user avatar
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Lucas paper (1988)

I read the Lucas paper https://papers.ssrn.com/sol3/papers.cfm?abstract_id=227120 I don't get the equations 35-36 on change in terms of trade due to change in endowments. Can anyone explain?
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1 answer
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How to solve dynamic problem with 2 production functions?

Suppose we have the following problem: $\max \int_0^\infty \exp(-\rho t) u(c(t))dt$ where $c(t)$ is consumption at time $t$. Subject to: $\dot{k}(t)= f(k(t))- c(t) - \delta k(t)$. where $k$ is capital,...
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Conditional Convergence

Lets assume that we have a theoretical model in this specification to test conditional convergence: \begin{equation} \frac{1}{T} \ln\left(\frac{y_{it}}{y_{it-1}}\right) = a - (1 - e^{-\beta T})\ln(y_{...
kostas2323's user avatar
1 vote
0 answers
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Controlling for Log population with Log GDP per Capita outcome in OLS

Bartlett and Partnoy (BP) (2020) show that OLS with natural log dependent variables that are ratios must include the ln(denominator) on the RHS or they must assume that the numerator and denominator ...
dcoy's user avatar
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2 answers
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Absolute Convergence

I have noticed that some researchers in order to test convergence hypothesis apply a model in this form: $(1/T) \ln(y_{it}/y_{i,t-1}) = b_0 - b_1\ln(y_{i,t-1}) + u_{it} $ (Barro & Sala-I-Martin, ...
kostas2323's user avatar
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If Milei is able to apply his economic plan during the next decade, what are the chances of Argentina becoming (once again) a major economy?

Once Argentina was one of the strongest economies in South America. It is pretty clear that the economic model that made Argentina successful then does not stand a big chance to work again. Javier ...
Hvjurthuk's user avatar
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non-ponzi condition

What Is The Differences Between R(T) And R(S) In No-Ponzi Condition In Ramsey Growth Model?
Huy Lê Thanh's user avatar
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Ramsey no ponzi condition

Please help me understand how to create these functions, sometime they use "t" denote, sometime use "r" denote that make me feel confuse. Function (17) and from (19) to (23)
Huy Lê Thanh's user avatar
0 votes
1 answer
76 views

Ramsey model problem

Explain the no-Ponzi game condition throughout the function. Does the constrain function: also reflect include the No-Ponzi condition?
Huy Lê Thanh's user avatar
1 vote
1 answer
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How the saving rates were derived in Azariadis (1996)'s Impatience Trap?

The household maximizes his lifetime utility function according to $$ \max_{c_1, c_2} v(c_1, c_2) := \frac{1}{\beta(c_1)} \log c_1 + \log c_2 - A(c_1, c_2) $$ subject to $$ \beta(c_1) = \begin{cases} ...
teddi's user avatar
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Help with Solow model

I need help with the following question, I would really appreciate any help. For the general case of any production function, the differential equation for k(superscript dot) looked as follows: k(...
Lee112's user avatar
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Do developed countries defraud trillions of dollars from developing countries?

According to the Guardian, rich Western countries defraud large amounts of money from poor countries, much more than they give in development aid. If we add theft through trade in services to the mix,...
Riemann's user avatar
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2 votes
2 answers
498 views

In what way do developed countries steal trillions of dollars from developing countries?

According to the Guardian, rich Western countries 'steal' large amounts of money from poor countries, much more than they give in development aid. If we add theft through trade in services to the mix,...
Riemann's user avatar
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1 vote
1 answer
165 views

Ramsey model condition

Why are transversality conditions and no-ponzi game conditions needed in the Ramsey model? And why do we assume that is a CIES utility function?
Huy Lê Thanh's user avatar
2 votes
2 answers
253 views

The Solow growth model

I wonder why at the beginning sf(k(t)) is steeper than δk(𝑡), but at some point, it starts flatter than δk(t)?
Huy Lê Thanh's user avatar
1 vote
1 answer
52 views

Solow Model in disrectly and continuously

what is the differences between solow model in disrectly time and continuously time? Why in disrectly time function use the equation: k(t+1)=(1-δ)k(t) + sf(k(t)) and in continuously time function use: ...
Huy Lê Thanh's user avatar
2 votes
2 answers
365 views

CRS assumption in Solow model

Can you explain why does Solow growth model assume "constant returns to scale"?
Huy Lê Thanh's user avatar
2 votes
1 answer
65 views

Literature exploring theoretically the relationship between inequality and economic growth

Specifically, I'd be very grateful if you may refer me to any literature treating wealth or income inequality or both, but the important thing is that it studies the relationship from a theoretical ...
manifold's user avatar
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1 vote
1 answer
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Log of 0 Probelm in Acemoglu et al. 2002b

in Acemoglu et. al. 2002b, which is about European Growth and Atlantic Trade, they do a log transformation of the atlantic trade variable. Since there are many observations where trade is 0, they say ...
Pajul's user avatar
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Why was the USD rangebound between 1987 and 1995 from an economic standpoint?

I'm trying to understand what caused this long period of range boundedness for the USD index from 1987-1995 from an economic standpoint. From my understanding. In 1985 the USD had reached it's ...
Man Dem's user avatar
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1 answer
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data on the quarterly and monthly world economic growth

I would be extremely grateful if you could assist me in acquiring access to dependable and current data regarding global economic growth or GDP growth rates, both at the quarterly and monthly levels. ...
ebrahimi's user avatar
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Average growth rate estimation

How can we estimate the average growth rate from 2011 to 2022,when with time, the quantity is first increasing at decreasing rate, then decreasing and then again increasing at an increasing rate with ...
Khanal's user avatar
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1 vote
2 answers
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Find the salary and interest rate in the $AK$ model

I'm trying to solve this exercise for Macroeconomics III (the course covers long-run growth models). Find the wage $w_t$ and the interest rate $r_t$ in the $AK$ model, i.e., the production function is ...
Nicolas Torres's user avatar
2 votes
1 answer
113 views

Present Value of flow of profits with constant interest rate

I'm studying Schumpeterian Models of Quality Ladders from the Barro's book (Ch.7). I have problems in getting the derivation of equation $(7.13)$ as follows The basic idea of those models is: when an ...
Maximilian's user avatar
2 votes
1 answer
66 views

Why is a patent considered as a non-rival good?

I mean, if a company received a patent for a particular invention that they did, others can't use the same patent. They can try to imitate the company and eventually receive a patent for their ...
Marta's user avatar
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0 answers
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risk of removing tariffs

I am a student and I am on the subject of risk of national production. How can I measure the economic effects of the elimination of tariffs on a product with a productive disadvantage compared to ...
latyno Heat's user avatar
1 vote
0 answers
21 views

The correct classification of system costs: maintenance, excess consumption, necessary consumption, development?

Yesterday I saw in one of the videos on YouTube a classification of the expenses of the system consisting of: maintaining the system necessary consumption excess consumption development Please tell ...
Mr. LOLO's user avatar
2 votes
1 answer
84 views

China interest rates

"the PBoC said it would keep interest rates below the nominal GDP growth rate as a way of maintaining debt sustainability. But this only makes debt "sustainable" by implicitly ...
qinnairen's user avatar
0 votes
2 answers
262 views

Revisiting development of Solow Model with no population growth and no technical progress

Consider an economy descried by the production function: 𝑌 = 𝐹(𝐾, 𝐿) = 𝐾0.3𝐿0.7. a) Derive the per-worker production function. b)Assuming no population growth or technological progress, find the ...
Gibson Kashindwa's user avatar
0 votes
1 answer
84 views

Is John Maynard Keynes an economic liberal or an economic nationalist?

I am working on a research project about political economy. However, I stumbled upon differences in the interpretation of the orientation of John Maynard Keynes. Some sources indicate that Keynes is a ...
Nikolay Bogdanov's user avatar
4 votes
0 answers
45 views

Aggregation in macroeconomic model with expanding product varieties

The final good is produced by a competitive industry combining a set of intermediate products, $i ∈ [0, N_t ]$ , using a CES aggregator: \begin{equation} Y= \left( \int_{0}^{N_t} y(i)^{\frac{\sigma -1}...
John M.'s user avatar
  • 267
3 votes
1 answer
198 views

Three types of Neutral technological Change

Can you tell me why the isoquants changes as per pic below in the three cases of neutral technological change: i) Hicks neutral, ii) Solow neutral, iii) Harrod neutral
John M.'s user avatar
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