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Reassessing Edgeworth’s conjecture when population dynamics is stochastic

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  • Marsiglio, Simone

Abstract

We analyze the implications of different welfare criteria on economic and population growth in the case of stochastic population change. Edgeworth (1925) argues that total utilitarianism leads to a lower economic performance and a larger population size than average utilitarianism. Following works show that while his intuition holds in a static framework, the result is unclear in a dynamic setting of endogenous growth. We show that if population dynamics is stochastic, Edgeworth’s conjecture may or may not hold. In particular, which utilitarian criterion implies larger economic and population growth rates depends on the value of the inverse of the intertemporal elasticity of substitution, the features of the random process driving demographic change and the magnitude of the (linear) dilution coefficient. We also characterize the size of the range of parameter values supporting Edgeworth’s conjecture; such a range is wide if the dilution parameter is large enough while it is particularly narrow (but still non-empty) if the parameter is small.

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  • Marsiglio, Simone, 2014. "Reassessing Edgeworth’s conjecture when population dynamics is stochastic," Journal of Macroeconomics, Elsevier, vol. 42(C), pages 130-140.
  • Handle: RePEc:eee:jmacro:v:42:y:2014:i:c:p:130-140
    DOI: 10.1016/j.jmacro.2014.07.008
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    Cited by:

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    2. Diwakar Bharat & Sorek Gilad, 2017. "Human-capital spillover, population and R&D-based growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 17(1), pages 1-17, January.
    3. Simone Marsiglio, 2017. "A simple endogenous growth model with endogenous fertility and environmental concern," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(3), pages 263-282, July.
    4. Thomas I. Renström & Luca Spataro, 2021. "Optimal taxation in an endogenous growth model with variable population and public expenditure," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(4), pages 639-659, August.
    5. Simone Marsiglio & Davide Torre, 2018. "Economic growth and abatement activities in a stochastic environment: a multi-objective approach," Annals of Operations Research, Springer, vol. 267(1), pages 321-334, August.
    6. Lupi, Veronica & Marsiglio, Simone, 2021. "Population growth and climate change: A dynamic integrated climate-economy-demography model," Ecological Economics, Elsevier, vol. 184(C).
    7. Cinzia Colapinto & Danilo Liuzzi & Simone Marsiglio, 2017. "Sustainability and intertemporal equity: a multicriteria approach," Annals of Operations Research, Springer, vol. 251(1), pages 271-284, April.
    8. Bharat Diwakar & Gilad Sorek, 2016. "Human-Capital Spillover, Population, and Economic Growth," Auburn Economics Working Paper Series auwp2016-02, Department of Economics, Auburn University.
    9. Wongboonsin, Kua & Phiromswad, Piyachart, 2017. "Searching for empirical linkages between demographic structure and economic growth," Economic Modelling, Elsevier, vol. 60(C), pages 364-379.

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    More about this item

    Keywords

    Edgeworth’s conjecture; Stochastic population; Economic growth; Welfare criteria;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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