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The Galor-Weil Model Revisited: A Quantitative Exercise

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  • Nils-Petter Lagerlöf

    (York University)

Abstract

Abstract: The long-run growth model of Galor and Weil (AER 2000) is examined quantitatively. We first give parametric forms to some functions which were only given on general form in the original article. We then choose numerical parameter values in line with calibrations of related long-run growth models, and with data. Finally, we simulate the model. We find, inter alia, that the time paths for population, and other variables, display oscillatory behavior: they move in endogenous cycles. As the economy transits from Malthusian stagnation to modern growth these oscillations die out. This is consistent with population growth rates fluctuating considerably in historical data, but having stabilized in modern economies. We also show that these cycles are not an artifact of the two-period life setting: allowing adults to live on after the second period of life with some probability does not make the oscillations go away. Rather, the cycles are driven by fertility being proportional to per-capita income minus the parental subsistence requirement. When population is large, and per-capita incomes close to subsistence, fertility is therefore sensitive to changes in population levels. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2005.07.002
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 9 (2006)
Issue (Month): 1 (January)
Pages: 116-142

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Handle: RePEc:red:issued:v:9:y:2006:i:1:p:116-142

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Related research

Keywords: Mathusian; Long-Run Growth; Galor-Weil Model;

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References

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  1. Gary D. Hansen & Edward C. Prescott, 1998. "Malthus to Solow," NBER Working Papers 6858, National Bureau of Economic Research, Inc.
  2. Robert Tamura, 2004. "Human capital and economic development," Working Paper 2004-34, Federal Reserve Bank of Atlanta.
  3. Jeremy Greenwood & Ananth Seshadri & Guillaume Vandenbroucke, 2005. "The Baby Boom and Baby Bust," American Economic Review, American Economic Association, vol. 95(1), pages 183-207, March.
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  12. Galor, Oded, 2005. "From Stagnation to Growth: Unified Growth Theory," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 4, pages 171-293 Elsevier.
  13. Grossman, Herschel I. & Mendoza, Juan, 2003. "Scarcity and appropriative competition," European Journal of Political Economy, Elsevier, vol. 19(4), pages 747-758, November.
  14. Galor, Oded & Weil, David, 1999. "From Malthusian Stagnation to Modern Growth," CEPR Discussion Papers 2082, C.E.P.R. Discussion Papers.
  15. Oded Galor & Omer Moav, 2002. "Natural Selection And The Origin Of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1133-1191, November.
  16. Costas Azariadis & James Bullard & Lee Ohanian, 2001. "Trend-reverting fluctuations in the life-cycle model," Working Papers 1998-015, Federal Reserve Bank of St. Louis.
  17. Matthias Doepke, 2004. "Accounting for Fertility Decline During the Transition to Growth," Journal of Economic Growth, Springer, vol. 9(3), pages 347-383, 09.
  18. Michele Boldrin & Larry E. Jones, 2002. "Mortality, Fertility, and Saving in a Malthusian Economy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 775-814, October.
  19. Tamura, Robert, 2002. "Human capital and the switch from agriculture to industry," Journal of Economic Dynamics and Control, Elsevier, vol. 27(2), pages 207-242, December.
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