Questions tagged [economic-growth]

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

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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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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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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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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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655 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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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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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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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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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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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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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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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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437 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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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 ...
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Is UK house price spiral connected to debt based monetary system?

(cross-posted from Personal Finance & Money) Is the monetary system's debt basis* driving government policy on housing and property, and how could this ultimately affect personal housing ...
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429 views

Why some countries are wealthier than others?

Twin-peak of economic growth is one of the concepts discussed in economics. Most of explanations for poverty traps are baseed on the lack of infrastructures and public goods. How could be another main ...
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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 ...
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A recursive production function

I've been reading a book on a Kaleckian economics model, but there is a recursive function that has been bothering me. Can anyone provide some insight into why the equation why designed like this? ...
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on economic growth and Second Welfare theorem

While I was studying eighth edition of Mankiw's Macroeconomics, in chapter 9 on Economic Growth(pg. 245), the author mentions : "Some economists have proposed increasing the incentive to save by ...
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Simple Neoclassical Growth Model with Elastic Labor and Non-Standard Capital Adjustment Costs

I have the following social planner problem to maximize $\{c_t, k_t, n_t \}$ $\begin{gather*}E_0 \sum_{t=0}^\infty \beta^t U(c_t, 1 - n_t), 0 < \beta < 1\end{gather*}$ subject to $\begin{...
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Why the total value of the whole economy is constantly appreciating?

Take S&P for example. In the long run it just keeps climbing. Same for the market as a whole. Why would this happen? Why the market keeps going up (in the long term) all the time? (source)
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Deriving the golden-rule savings rate in a Solow Model

Consider an economy described by the per worker production function function: $$y = f(k) = 2k^\frac{1}{2}$$ and a depreciation rate $δ$ of $.05, 5%$. Considering what we know to be true of the ...
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685 views

What happens to effective consumption and capital in the Ramsey/Cass-Koopmans(RCK) model when technological growth decreases?

Is the conclusion that both decline correct? Both long and short run. Let $g_x$ denote growth rate of $x$, $g_c$ the growth rate of $\hat c$. In the model there is no depreciation so, $$ g_c = \frac ...
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672 views

Solow model: Partial derivative of y with respect to n

I am trying to find the derivative of $y$ with respect to $n$. All I need to do is take the partial derivative $\frac{\partial y}{\partial n}$ of the function: $sf(k) = (n+g+\delta)k$ Here is what I ...
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How to intuit a necessary optimality conidtion involving growth rate of Lagrange multiplier in Ramsey growth model?

I encountered a necessary optimality conidtion involving growth rate of Lagrange multiplier in this note on Ramsey model $$\frac{\dot \lambda}{\lambda} = \mathcal {v} - (f^\prime(k)-\delta-\xi)$$ in ...
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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 ...
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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 ...
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Can we “prove” that slow growth is due to deficient demand?

We hear more and more these days about growth, particularly in the Eurozone and Britain, being beneath its long-term trend due to deficient demand. I can think of a few things which support that idea -...
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Macroeconomic formulas for global limited raw material economy exist?

Macroeconomics basic formulas are referring to a model in which the raw material are unlimited. Also the efficiency of production is a consequence of the pressure done by consumers (that buy the most ...
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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-...
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153 views

Will China's GDP be greater than the USA's and Europe's combined?

A newspaper said in 2080 China can be a developed country, with a bigger population. Does that mean China's GDP is going to be bigger than the USA's and Europe's combined? Also, is this possible even ...
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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 ...
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Growth Accounting

In growth accounting the production function is defined as follows: $$Y= AF(K,L) $$ That means output $Y$ is dependent upon capital $K$, labour $L$ and technology $A$. Now to produce something, in ...
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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 ...
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396 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 ...
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359 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 ...
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Banking System, Canada & US

Why are the way banks are established and spread out in Canada and US so different? Canada: There are only six major banks and most products offered are very competitive. Its almost unusual to hear ...
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Schumpeterian Business Cycles

The basic idea of Schumpeterian Business Cycles is that new technologies require creative destruction but will yield positive growth. These two opposing forces have impacts onto the real economy at ...
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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 ...
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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 (...

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