Questions tagged [economic-growth]

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

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52 views

Human capital for under developed countries

I am currently undergoing a study on economic growth in 11 countries: Bangladesh, Egypt, Indonesia, Iran, Mexico, Philippines, Pakistan, South Korea, Turkey and Vietnam. I plan to use panel regression....
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115 views

Determinants of economic growth in ARDL model - nominal or real variables?

I'm investigating the determinants of economic growth of my country. Some of them are of long term other are of short term. For that I'm trying to construct an ARDL model, but I'm confused about the ...
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697 views

What is the danger of (China's) investment-led growth as opposed to consumption-led growth?

I keep reading that China must switch to consumption-led growth or productivity-led growth, that investment-led growth is 'dangerous.' I understand that it is probably not sustainable in the sense ...
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722 views

Increase in per capita GDP always means GDP is growing?

This question was asked in very popular civil services examination. Question is : Whether the following statement is correct or not? Statement : If a country is experiencing increase in its per-...
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747 views

Basic Solow Growth Model: Stability Proof

I am reading through McCandless "The ABCs of RBCs" this summer to get a preview of what I need to know for the coming Fall semester. It did not take long to find a statement that I can easily accept ...
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201 views

How would unlimited free energy affect the global market? [closed]

What will the effect on today's global market if a new source of free unlimited energy was to be discovered? How badly will it disrupt today's global market and how badly will it affect our currency? ...
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351 views

Updating MRW (1992) with PWT 9.0

I'm trying to rework Mankiw, Romer, Weil (1992) with fresh data. From their paper: n: workforce growth rate We measure n as the average rate of growth of the working-age population, where working ...
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1answer
55 views

How to estimate a constant elasticity of substitution for a country in a solow model including human capital and scarce resources

For my thesis I was looking for some help due to the facts of my little knowledge of econometrics. I appreciate any help whether its directly dealing with my question or literature advice. Basically ...
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240 views

Phase Diagram - growth model

The dynamics of Ramsey-Cass-Koopman growth model is usually summarized in phase diagrams with the 2 equations (conventional symbols apply): \begin{align*} \frac{\dot c}{c}=&\frac{r-\rho}{\theta}\\ ...
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How can I model immigration and xenophobia economically using these equations?

I'm trying to put together a toy model for immigration ($I$), labor prices ($w$), and a measure of xenophobic/nationalistic sentiment ($A$). What I've come up with so far is the following: $$\frac{dI}...
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Relationship between interest rate and rental price of capital

In Daron Acemoglu's Introduction to Modern Economic Growth (2009), P.32, it is stated that given assumption of exponential depreciation at the rate $\delta$ and normalization of price of final good to ...
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385 views

Stability of steady-state equilibrium for overlapping generation model

From Daron Acemoglu's Introduction to Modern Economic Growth, proposition 9.4 is that: In the overlapping-generations model with two-period lived households, Cobb-Douglas technology and CRRA ...
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163 views

Can an overall improvement in technology make the owners of one factor worse off?

In a closed two-factor economy, suppose there is a biased technological improvement that increases the productivity of both factors, but one more than the other. Can this reduce the aggregate returns (...
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334 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 ...
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280 views

What are the relationships between price stability and long term economic growth?

I was wondering what the links are between price stability and economic growth on the long term.
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47 views

How to prove that GDP grows at the same rate as consumption on Lab Equipment Model?

I'm studying the Lab Equipment Model (Barro-Sala-i-Martin, Chapter 6). I'm having trouble when trying to prove that every variables grows at the same rate as consumption. I was able to prove that $\...
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71 views

Books on Technological Progress and Growth

I've done some google search for good, reader friendly albeit technical, books on technological progress/change and economic growth. However, I've not found what I want. If you are using or have heard ...
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146 views

Dynamic Optimization : Resource Stock as a Sink

I think about a dynamic problem where social planner maximizes the following utility ; $$\underset{c\left(t\right)}{max}\int_{0}^{\infty}u\left(c\left(t\right)\right)e^{-\rho t}$$ subject to two ...
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60 views

Positive interaction term with one negative component?

Say I have an augmented growth regression, where my Y is GDP growth, and my Xs are the classical MRW variables, + international aid + corruption + the interaction term between the two. Basically, I'm ...
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69 views

Decreasing labor force and GDP

I'm a bachelor student writing a paper on the effects of China's one child policy on future GDP. My professor told me to use growth models. However, I'm unsure which growth model I need to use for ...
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5answers
637 views

In GDP growth studies, are factors of production measured as stock or flows?

Consider the following cases: One machine (capital) is used by multiple producers within one year. For instance, farmers renting tractors from the same company. In this case, in terms of GDP, there ...
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1answer
81 views

Growth regressions over 3-year periods; regressors in average or year values?

Say that I want to estimate a growth regression basically similar to the Augmented Solow Model one, except my dependent variable is not Y/L, but it's the average GDP growth over a 3-year period. As my ...
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3answers
4k 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 ...
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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 + ...
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Transversality Condition in neoclassical growth model

In the neo-classical growth model there is the following transversality condition: $$\lim_{t\rightarrow\infty}\beta^{t}u'(c_{t})k_{t+1}= 0,$$ where $k_{t+1}$ is the capital at period $t$. My ...
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How can a free market be operated in a way that significant social and environmental costs are intrinsically covered?

More precisely, is there any practical way to operate a free market so that external costs, namely negative social and environmental impacts, become naturally (intrinsically) covered (paid for or ...
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Term for rapid economic growth when starting over or in a new place

Please bear with me as I know little about general Economics, and I'm sure I am massively oversimplifying what I am trying to describe. I'm looking for a term to describe what happens when an economy ...
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532 views

What happens if money supply grows more slowly than inflation?

I'm thinking the case of Argentina. In 2016, prices raised about 40% but according to the central bank of Argentina, money supply grew only 30%. Is this going to have an effect in 2017? What could we ...
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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?
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How can a positive relationship between capital per effective worker and technological change be explained?

I'll get to the point: so, in the context of theories of long-run economic growth, I understand at a basic level that, in the Solow model, there is a negative relationship between capital per ...
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What is a supply side shock in macroeconomics?

I was hoping someone could clarify what exactly is meant when someone refers to a country as having undergone a 'supply-side shock' and generally speaking when one is evaluating the health or growth ...
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Growth and Development [closed]

Behavioural axiom in microeconomics explain a lots regarding why some countries lead and why some lag when it comes to growth and development? Please specify me the meaning of behavioural axiom here ...
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313 views

The United States' position on the Laffer Curve

According to a 2012 IGM panel (cf. reference below), most experts believe that a federal income tax cut would lead to a higher GDP in five years, ceteris paribus. Is this effect purely Keynesian, and ...
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362 views

Is population growth irrelevant with respect to per capita GDP growth

In Solow's growth model the growth rate of the output or GDP of a country is denoted by $g$. In the model this can be decomposed to $$ g = g_l + g_k, $$ where $g_l$ is the growth rate of the effective ...
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86 views

Is a country in economic downturn if its growth rate is negative, but improving?

As I understand it, economic downturn means that economic growth is significantly slowing down or entering into recession. (If anyone wants to correct me, please do so). i.e. Growth rate is decreasing....
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889 views

Calculating growth rate of capital when not in steady state

Given a Cobb-Douglas production function, the annual population growth rate, savings rate, alpha, annual depreciation rate, and annual technological progress rate, how would one calculate the growth ...
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109 views

Could Depreciation of Capital $=\delta(K(t))^{\theta}$ with $\theta<1$ Be a Realistic Assumption?

In the context of a long-term growth model with $K$ representing aggregate (man-made) capital, what theoretical or empirical reasons, if any, might be given for assuming that depreciation of capital $...
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When should a company's revenue and share price grow faster or slower than the economy?

I was listening to a famous investor discuss an investment of his in an interview. He had bought shares in a bank that was quite successful, though it was a small bank. The bank is based in a highly ...
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What are the different patterns/quantity of employment according to demands of different income ranges?

I don't really have that much knowledge on economics or anything, so perhaps that's something I'd find an answer if I just knew the adequate terminology. Rephrasing/explaining my question: different ...
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Directed technical change, Acemoglu (2002) framework - trying to understand how an equation is derived

You may have read Acemoglu (2002) on the topic of directed technical change. I am reading a similar research paper, and I could not understand how the author derived the final equation using ...
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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 ...
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Why do the economic system freeze when the growth is null

When there is no growth, economy goes bad, unemployement increases, consumption decreases, even in a situation where population is not growing. Why ? We could imagine that without growth, the country ...
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959 views

Why goods prices are normalized in each period in growth models?

As it is known, in simple economic growth models such as the Solow or the Ramsey model, all goods prices are set equal to 1 in each period. Also, as we known from general equilibrium theory, ...
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78 views

Eric Reinert's conspiracy theory?

After read Eric Reinert's "How Rich Countries Got Rich ... and Why Poor Countries Stay Poor", I've got the question: Reinert theory is: Rich West countries are investing to advanced branches at ...
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Reconciling low wages with high technology and high education

This is one example of many recent doom storied prognosticating that the "millennial" generation will be the first in (recent) history to experience lower incomes than their predecessors—at least in ...
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Growth rate of variables on a balanced growth path (BGP)

Normally, in the very basic endogeneous model of growth. It is said that all variables grow at a constant rate. Let's take the basic capital accumulation ; $$\dot{K}=Y-C$$ If I write this in ...
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Why does immigration boost the economy? (or does it not…?)

I'm a novice at macroeconomics, and trying to understand the effect of immigration (from developing nations) on the economy of a developed nation. Specifically, I am considering the effect when the ...
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Are there big waves of entrepreneurship over time?

In some models there are times when there are many entrepreneurs, and others when there are not. Is this a stylized fact of some kind? Are there any statistics about how entrepreneurial a particular ...
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155 views

In what sense is economic growth cumulative?

In my economics syllabus, one of the student competences is to "Show the cumulative nature of growth and measure average and annual rates of growth". What I don't understand is how a country's GDP ...
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180 views

Can a Discount Rate be Inferred within a Solow-Swan Growth Model?

I'm trying to understand the implications of a Solow-Swan growth model with, to keep things simple, constant population, and constant Cobb-Douglas technology written in per capita form as $y=k^{\alpha}...