Questions tagged [economic-growth]
An increase over time in the quantity of goods and services produced within an economy.
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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{...
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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?
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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, ...
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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 ...
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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 ...
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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 ...
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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....
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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. } \...
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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 ...
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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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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_{...
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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 ...
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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, ...
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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 ...
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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?
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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)
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Ramsey model problem
Explain the no-Ponzi game condition throughout the function.
Does the constrain function: also reflect include the No-Ponzi condition?
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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}
...
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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(...
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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,...
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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,...
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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?
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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)?
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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: ...
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CRS assumption in Solow model
Can you explain why does Solow growth model assume "constant returns to scale"?
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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 ...
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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 ...
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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 ...
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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. ...
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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 ...
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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
...
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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 ...
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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 ...
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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 ...
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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 ...
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Does issuing new bonds tend to raise yields empirically?
Suppose a national government issues new long dated bonds (say 30y) to finance capital investment which leads to higher long term growth. For convenience purposes lets assume everything here is zero ...
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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 ...
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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 ...
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we speak only of the investment capital market without the production capital market
In the investment capital market, we speak only of the investment capital market without the production capital market, question: is there a production capital market?
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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 ...
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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}...
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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
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Solow Model - speed of convergence
This is a question also for those with a good expertise in micro. For micro guys who wanna go streight to the question, just jump to equation $(1)$
I'm studying the Solow growth model.
Let's write the ...
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Measuring value added per capita technique (Macroeconomics)
I am reading this paper, and in the methods section, the authors define manufacturing value added per capita as, "For example, manufacturing value added per capita is equivalent to manufacturing ...
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Algebra and interpretation of recombinant growth theory Weitzman 1998
I do not understand how Weitzman 1998 (https://scholar.harvard.edu/files/weitzman/files/recombinant_growth.pdf)
arrives at the following expression (equation 5 in the above article).
$$ \alpha[N(1)-1/...
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In a 3 sector economy, calculate maximum possible share of one of the sectors over time if initial sectoral composition and annual growth rate given
In an economy, the agriculture, industrial and services sectors have initial shares of 50, 20 and 30 percent respectively in the total GDP. They also subsequently grow at the following constant annual ...
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Solow model - concavity vs strict concavity
I'm studying the Solow growth model from the Acemoglu's book.
Consider the following standard assumptions:
The fact that $F()$ exhibits constant returns to scale means that F() is linear homogenous. ...
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Lagrangian for the utility-mazimization of a household in a Menu Cost model, first order condition to Ci?
I need to solve the partial derivative to C_i of the integral provided below. I'd be more than happy for some help.
Based on the book's answer, we get:
Can someone explain how do we get there? And ...
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