Beyond the Linearity Critique: The Knife-Edge Assumption of Steady State Growth
AbstractThe "linearity critique" of endogenous growth models is presented in a general context of an arbitrary growth model and reassessed. It is argued, that presence of linearities is not a valid criterion for rejecting growth models. Existence of exponential/geometrical steady- state growth (i.e. of a balanced growth path with strictly positive growth rates) necessarily requires some knife-edge condition, which is not satisfied by typical parameter values. Hence, balanced growth paths are fragile and sensitive to smallest disturbances in parameter values. Adding higher order differential/difference equations to a model does not change the knife-edge character of steady-state growth.
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 EconWPA in its series GE, Growth, Math methods with number 0505003.
Length: 20 pages
Date of creation: 09 May 2005
Date of revision: 23 Jun 2005
Note: Type of Document - pdf; pages: 20
Contact details of provider:
Web page: http://126.96.36.199
long-run economic growth; knife-edge conditions; linearity critique; ordinary differential equations;
Other versions of this item:
- Jakub Growiec, 2007. "Beyond the Linearity Critique: The Knife-edge Assumption of Steady-state Growth," Economic Theory, Springer, vol. 31(3), pages 489-499, June.
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-05-14 (All new papers)
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.:
- Charles I. Jones, 2004.
"Growth and Ideas,"
NBER Working Papers
10767, National Bureau of Economic Research, Inc.
- Charles I. Jones, .
"Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run,"
99008, Stanford University, Department of Economics.
- Jones Charles I., 2001. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(2), pages 1-45, August.
- Charles I. Jones, 1999. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," NBER Working Papers 7375, National Bureau of Economic Research, Inc.
- Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-84, August.
- Connolly, Michelle & Peretto, Pietro F, 2003. " Industry and the Family: Two Engines of Growth," Journal of Economic Growth, Springer, vol. 8(1), pages 115-48, March.
- Jonathan Temple, 2003. "The Long-Run implications of Growth Theories," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 497-510, 07.
- Tobias Kronenberg, 2010. "Energy conservation, unemployment and the direction of technical change," Portuguese Economic Journal, Springer, vol. 9(1), pages 1-17, April.
- Christian Groth & Karl-Josef Koch & Thomas M. Steger, 2009.
"When economic growth is less than exponential,"
129-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
- Christian Groth & Karl-Josef Koch & Thomas M. Steger, 2009. "When economic growth is less than exponential," MAGKS Papers on Economics 200931, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Christian Groth & Karl-Josef Koch & Thomas M. Steger, . "When Economic Growth is Less than Exponential," EPRU Working Paper Series 2009-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised May 2009.
- Attar, Mustafa A., 2008. "Science in the Third Dimension of R&D," MPRA Paper 9427, University Library of Munich, Germany.
- Jakub Growiec, 2011.
"A microfoundation for normalized CES production functions with factor-augmenting technical change,"
National Bank of Poland Working Papers
98, National Bank of Poland, Economic Institute.
- Growiec, Jakub, 2013. "A microfoundation for normalized CES production functions with factor-augmenting technical change," Journal of Economic Dynamics and Control, Elsevier, vol. 37(11), pages 2336-2350.
- Jakub Growiec, 2011. "A Microfoundation for Normalized CES Production Functions with Factor-Augmenting Technical Change," DEGIT Conference Papers c016_013, DEGIT, Dynamics, Economic Growth, and International Trade.
- Daniel Cardona & Fernando Sanchez Losada, 2007. "Cost-Based Models of Economic Growth," Working Papers in Economics 179, Universitat de Barcelona. Espai de Recerca en Economia.
- Christiaans, Thomas, 2008. "International trade and industrialization in a non-scale model of economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 19(3), pages 221-236, September.
- Growiec, Jakub, 2010.
"Knife-edge conditions in the modeling of long-run growth regularities,"
Journal of Macroeconomics,
Elsevier, vol. 32(4), pages 1143-1154, December.
- 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.
- Growiec, Jakub, 2008. "Knife-edge conditions in the modeling of long-run growth regularities," MPRA Paper 9956, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.