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When economic growth is less than exponential

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  • Christian Groth

    ()
    (University of Copenhagen)

  • Karl-Josef Koch

    (University of Siegen)

  • Thomas M. Steger

    (University of Leipzig)

Abstract

This paper argues that growth theory needs a more general notion of “regularity” than that of exponential growth. We suggest that paths along which the rate of decline of the growth rate is proportional to the growth rate itself deserve attention. This opens up for considering a richer set of parameter combinations than in standard growth models. And it avoids the usual oversimplistic dichotomy of either exponential growth or stagnation. Allowing zero population growth in three different growth models (the Jones R&D-based model, a learning-by-doing model, and an embodied technical change model) serves as illustrations that a continuum of “regular” growth processes fill the whole range between exponential growth and complete stagnation.

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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/31-2009_groth.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200931.

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Length: 33 pages
Date of creation: 2009
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:200931

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Keywords: Quasi-arithmetic growth; Regular growth; Semi-endogenous growth; Knife-edge restrictions; Learning by doing; Embodied technical change;

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References

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  1. Charles I. Jones, 2004. "Growth and Ideas," NBER Working Papers 10767, National Bureau of Economic Research, Inc.
  2. Attanasio, Orazio P & Weber, Guglielmo, 1995. "Is Consumption Growth Consistent with Intertemporal Optimization? Evidence from the Consumer Expenditure Survey," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1121-57, December.
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  10. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  11. Geir B. Asheim & Wolfgang Buchholz & John M. Hartwick & Tapan Mitra & Cees A. Withagen, 2005. "Constant Savings Rates and Quasi-Arithmetic Population Growth under Exhaustible Resource Constraints," CESifo Working Paper Series 1573, CESifo Group Munich.
  12. BOUCEKKINE, Raouf & DEL RIO, Fernando & LICANDRO, Omar, . "Embodied technological change, learning-by-doint and the productivity slowdown," CORE Discussion Papers RP -1629, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Solow, Robert M., 2000. "Growth Theory: An Exposition," OUP Catalogue, Oxford University Press, edition 2, number 9780195109030, October.
  14. Jakub Growiec, 2009. "Knife-Edge Conditions in the Modeling of Long-Run Growth Regularities," National Bank of Poland Working Papers 68, National Bank of Poland, Economic Institute.
  15. Alvarez-Pelaez, Maria J. & Groth, Christian, 2005. "Too little or too much R&D?," European Economic Review, Elsevier, vol. 49(2), pages 437-456, February.
  16. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-62, June.
  17. Lutz G. Arnold, 2006. "The Dynamics of the Jones R&D Growth Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(1), pages 143-152, January.
  18. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
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  22. Pezzey, John C.V., 2004. "Exact measures of income in a hyperbolic economy," Environment and Development Economics, Cambridge University Press, vol. 9(04), pages 473-484, August.
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Citations

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Cited by:
  1. Tom Holden, 2010. "Products, patents and productivity persistence: A DSGE model of endogenous growth," Economics Series Working Papers 512, University of Oxford, Department of Economics.
  2. Ronald Wendner & Christian Groth, 2012. "Embodied learning by investing and speed of convergence," Graz Economics Papers 2012-04, University of Graz, Department of Economics.
  3. Grossmann, Volker, 2008. "Entrepreneurial Innovation and Sustained Long-Run Growth without Weak or Strong Scale Effects," IZA Discussion Papers 3389, Institute for the Study of Labor (IZA).
  4. Bazhanov, Andrei V., 2013. "Constant-utility paths in a resource-based economy," Resource and Energy Economics, Elsevier, vol. 35(3), pages 342-355.
  5. Jakub Growiec & Christian Groth, 2012. "A Note on Aggregating Human Capital Across Heterogeneous Cohorts," EcoMod2012 4193, EcoMod.
  6. Growiec, Jakub, 2008. "Knife-edge conditions in the modeling of long-run growth regularities," MPRA Paper 9956, University Library of Munich, Germany.
  7. Christian Groth & Ronald Wendner, 2011. "Learning by Investing, Embodiment, and Speed of Convergence," EPRU Working Paper Series 2011-01, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  8. Antonio Minniti & Carmelo Parello & Paul Segerstrom, 2013. "A Schumpeterian growth model with random quality improvements," Economic Theory, Springer, vol. 52(2), pages 755-791, March.
  9. Klaus Prettner & David Canning, 2014. "Increasing life expectancy and optimal retirement in general equilibrium," Economic Theory, Springer, vol. 56(1), pages 191-217, May.
  10. Grossmann, Volker, 2009. "Entrepreneurial innovation and economic growth," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 602-613, December.
  11. Tom Holden, 2012. "Medium-frequency cycles and the remarkable near trend-stationarity of output," School of Economics Discussion Papers 1412, School of Economics, University of Surrey.

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