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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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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 ...
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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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146 views

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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84 views

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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241 views

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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1answer
434 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 $k_t$). ...
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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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1answer
570 views

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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1answer
548 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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1answer
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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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510 views

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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81 views

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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2answers
113 views

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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1answer
78 views

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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1answer
374 views

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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2answers
131 views

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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1answer
115 views

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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2answers
36 views

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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1answer
207 views

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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1answer
122 views

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{...
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115 views

Is inequality increasing? Does it correspond to increasing social harm?

I have a series of related questions. My understanding is. Economic wealth (ie. GDP) per capita is increasing around the world. We can refer to this as 'the pie is getting bigger'. At the same ...
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46 views

GDP to employed people ration - solow swan model

Two countries A and B have identical production function $Y=AK^{1/3}N^{2/3}$, they are identical when it comes to all other factors with the exception that savings rate is $s_A>s_B$. a) What is the ...
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179 views

Consumption-Leisure Elasticity

The macro-literature insists on a consumption-leisure elasticity of 0 to match the balanced growth fact of constant labor supply. Is there any paper that tries to evaluate this elasticity using ...
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2answers
649 views

Growth theory / Initial GDP: positive coefficient sign

I estimated growth regressions for several EU countries. In each of them, the sign of "initial GDP"'s coefficient is statistically significant but positive, which contradicts growth theory as well as ...
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161 views

Microeconomic Model of Knowledge and Technology

Can you point me to any microeconomic models of knowledge and technology? It is intended to be used for simulation. The problem that arises is that you need to simulate the effects of technology on ...
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2answers
772 views

Neoclassical economic profit and growth theory versus marxian

Marxists have a very specific "profit" and "economic growth" theory. According to marxists, profit doesn't come from technology, whose cost will be reflected in the price of whatever commodity the ...
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863 views

Correlation and Causality: Data comparison of educational spending and GDP growth

I am interested as to whether or not Educational spending does or does not affect GDP and GDP growth (and as an aside GDP per Capita). As an overview, I've ranked the countries in each aspect (with 1 ...
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Is economic growth measured in real GDP or in real GDP per capita?

As an example, take a country where real GDP (measured in base year dollars) increases every year, but where the real GDP per capita (also measured in base year dollars) fluctuates, increasing and ...
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3answers
86 views

Does Pareto-efficency take into account growth?

I'll try to state my question clearly:   For a given a "wealth" allocation Wt = (w1, w2, w3, ... ) for individuals I = (i1, i2, i3, ... ). And a distribution of D= (w1/|W|, w2/|W|, w3/|W|, ... ...
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What happens to a production possibilities curve whenever there is too much labor? [closed]

If too much labor is added to a country's production, what happens to the production possibilities curve?
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discount factor on rival and non-rival goods

I am asking to myself if we must use a different discount rate on rival and non rival goods. In standard Solow-Swann model, we use generally the discount factor $\rho$. More formally, let's give the ...
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1answer
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What does it mean by 'intensive form'?

I encountered this phrase while reading up on growth models - that is to work with a function in intensive form. What does it mean when a function is in intensive form? Thanks!
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1answer
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What do we know about the causes of global income inequality?

According to the IMF, the GDP per capita in the USA is about \$57,000 per year. In many central African countries the figure is more like \$500 or less. These examples are indicative of the incredibly ...
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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, ...
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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 ...
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Subscription Growth Rate Model?

Can someone provide a formula (or set of formulas) for growth models for subscription based businesses? I've looked, but could only find general references about this business model -- no formulas. ...
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3answers
3k views

When can the fiscal multiplier be negative?

I am looking for a case study or data which shows a negative (fiscal/spending) multiplier effect. Does anyone know a study where this is analyzed?
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433 views

Hypothetical Long-term Business Cycle

I was looking through my textbook on Money, Banking, and the Economy and I came to the chart of the hypothetical short-term business cycle deviating around an upward sloping long-term cycle trend. My ...
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1answer
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Moral and economic development paradox?

I have often listen to the old man who criticized the lack of morality in the Chinese people nowadays: "To get more money, break through to the bottom line to get more money!" Is there a ...
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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 ...