Questions tagged [economic-growth]

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

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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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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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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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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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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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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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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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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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158 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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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}...
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Why do developing countries adopt 21st century technology, but stay behind in output per capita?

The economic growth rate of Latin America has been about 3% per year for decades; but if you have ever visited, many of the natives have: internet, smartphones, tomography, hybrid cars, etc. Why don'...
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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 ...
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Does the growth rate of a neoclassical production function converge as all input factors grow with constant, but different growth rates?

Suppose you have a neoclassical production function with N-inputs $F(x_t^1,...,x_t^N)$ All input factors grow in continuous time with constant, but not identical growth rates $g^j$. Assume $g^1 \leq ...
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What do economist state as evidence that “structural reform” works?

The typical recipe for countries to improve their growth rate and escape high indebtedness is to reduce expenditure and implement structural reform. What do people use as evidence of structural reform ...
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Understanding Tertiarization of the Economy

Trying to understand some of the core mechanics of tertiarization in developed economies. According to the WorldBank, "As incomes continue to rise, people’s needs become less “material” and they ...
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What analysis has been done to predict the next big financial crash?

There has been a lot of talk about a big pending financial crash due to the slowing global economy, low interest rates, rising debt levels, etc. Now I'm wondering: Has anyone done any analysis to ...
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Is global economic collapse inevitable? [duplicate]

The global economy depends on growth, but growth can never be indefinite in a finite world with limited space and resources. Moreover, growth always tends to decline over the long term due to the law ...
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What fraction of new businesses die out within a year?

Is there a simple way to figure out how many new businesses appear and disappear each year in the US economy? It seems a key question to figure out how the economy is changing over time, although I ...
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Who really benefits from economic growth?

In recent social protests, I have heard the claim that the economic growth benefits only the rich: they become richer while most people become poorer. To check whether this claim is realistic, I ...
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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 $k_t$). ...
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Growth accounting: technological progress grows at near zero rate

In a growth accounting exercise I backed out the time path of technical progress augmenting a factor. Annual growth rate of this factor saving innovation is very close to zero in the last few years. ...
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Ok to normalize GDP change by population change?

Does it make sense to normalize change in real GDP by the contemporaneous change in population? I'm interested in this calculation for the following reason. Suppose real GDP increases. I'd like to ...
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559 views

Critiques to Mankiw, Romer, Weil (1992) paper on Economic Growth

I'm searching for bibliography on the critiques to the Mankiw, Romer, Weil (1992) paper. If possible, could you give references to each critique? Any help would be appreciated.
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Are there stable improvements of the Ramsey-Cass-Koopmans model?

The Ramsey-Cass-Koopmans neoclassical model of growth is saddle path stable. In other words, it is stable upon perturbation from the steady state on a one-dimensional line, but is unstable towards a ...
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About intertemporal elasticity of substitution

The inter temporal elasticity of substitution between two periods of time is $$\sigma=-\frac{d[\ln(c(s)/c(t))]}{d[\ln(U'(c(s))/U'(c(t)))]}$$ I need to prove that $$\lim_{s \to t}\sigma = -\frac{U'(c(t)...
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Taking time derivative, growth equations [closed]

Can anyone please help with taking the derivative of the following equation with respect to time? $ln(\frac{\gamma_t+(n+\delta)}{sA}) = (\beta - 1)ln{k_t}+(\alpha+\beta-1)ln{N_t}$ This is not a ...
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How can economies grow if every account is perfectly balanced against others?

In an economy with finite actors, if every account is perfectly balanced against another account, how can the economy grow when new money enters? I am thinking of the following chain of events: The ...
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Why did the Greek GDP grow so fast between 2002 and 2004?

Here is the history of the Greek GDP. In 2004 year it was 239.7\$ billion, but in 2002 it was 157.7\$ billion. It grew by approximately 50%. How did it grow so fast?
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How is the growth rate form of the exchange equation derived?

Equation of exchange states: $ MV=PY $ where, $ M $ is Quantity of Money $ V $ is Velocity of Money $ P $ is Price Level $ Y $ is Real GDP Could someone please share how ...
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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 ...
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What's the relation between economic growth and buying power?

If a country had economic growth last year (2015) does that mean that the average citizen had a better buying power in that year (2015) than in the previous year (2014)? For example with their ...
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Under what circumstances is an increase in national output called economic growth?

An increase in output can be achieved in two basic ways. The first scenario: Aggregate demand increases, so supply extends. In this way the economy is making more use of its resources, but there is ...
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Solow Model, Growth rate of K/L and Y/L in steady state

I have been given the following setup: $$ Y=K^\theta (AL)^{1-\theta }$$ Where Y = Output, K = Capital, L = Labour and A = Productivity. $$ \frac{\dot{L}}{L} = n $$ $$ \frac{\dot{A}}{A} = g $$ The ...
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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 ...
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Why do rich countries remain rich?

I can think of two possible explanations: People there inherited the wealth of their ancestors (and of the companies of their generation). Advances in technology allows you to earn money more easily. ...
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Difference between short run and long run supply curves?

We know that in short run supply curve is horizontal which means that prices remain rigid while quantity of supply adjusts according to demand. However, in long run this reverses. I know about some ...
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If America's economy collapsed what would happen to all of the citizens? What if the whole global economy collapsed? [closed]

My journalism professor is not an expert in finance or economics but has studied history. She is always giving us a negative lecture on the America's economy and how the rich are taking al of the ...
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Econometric model for TFP

I want to model TFP series using an econometric model, be it AR(1) process, unit root with drift drift process etc. I was wondering if anyone knows of published papers discussing various methods of ...
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In 21st century and a globalized world, is economic growth still the metric by which to measure a state's success?

Economic growth as a yardstick for a government's success is relatively new on a human historical scale. In my thinking it has arisen out of an expansion of the expected function of a state. States at ...
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Growth accounting using CES functions

I was wondering how one could use a CES function in growth accounting exercise, does anyone have notes or resources that demonstrate this exercise? I've done growth accounting exercise using Cobb-D ...
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Analytically tractable Ramsey model: how to solve ODE for optimal trajectories

In Brunner and Strulik (2002) the authors claim, that the solution of \begin{align} \dot c &= \frac{c}{\sigma}(\alpha k^{\alpha-1} - \delta - \rho)\\ \dot k &= k^\alpha - \delta k - c \end{...