Can we predict long-run economic growth?
AbstractFor those concerned with the long-term value of their accounts, it can be a challenge to plan in the present for inflation-adjusted economic growth over coming decades. Here, I argue that there exists an economic constant that carries through time, and that this can help us to anticipate the more distant future: global economic wealth has a fixed link to civilization's overall rate of energy consumption from all sources; the ratio of these two quantities has not changed over the past 40 years that statistics are available. Power production and wealth rise equally quickly because civilization, like any other system in the universe, must consume and dissipate its energy reserves in order to sustain its current size. One perspective might be that financial wealth must ultimately collapse as we deplete our energy reserves. However, we can also expect that highly aggregated quantities like global wealth have inertia, and that growth rates must persist. Exceptionally rapid innovation in the two decades following 1950 allowed for unprecedented acceleration of inflation-adjusted rates of return. But today, real innovation rates are more stagnant. This means that, over the coming decade or so, global GDP and wealth should rise fairly steadily at an inflation-adjusted rate of about 2.2% per year.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by arXiv.org in its series Papers with number 1211.3102.
Date of creation: Nov 2012
Date of revision:
Publication status: Published in Garrett, T. J., 2012: Can we predict long-run economic growth?, Retirement Management Journal 2(2) 53-61
Contact details of provider:
Web page: http://arxiv.org/
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-24 (All new papers)
- NEP-ENE-2012-11-24 (Energy Economics)
- NEP-FOR-2012-11-24 (Forecasting)
- NEP-HPE-2012-11-24 (History & Philosophy of Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Irene Scher & Jonathan Koomey, 2011. "Is accurate forecasting of economic systems possible?," Climatic Change, Springer, vol. 104(3), pages 473-479, February.
- Saunders, Harry D., 2000. "A view from the macro side: rebound, backfire, and Khazzoom-Brookes," Energy Policy, Elsevier, vol. 28(6-7), pages 439-449, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (arXiv administrators).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.