IDEAS home Printed from https://ideas.repec.org/a/nwe/eajour/y2016i3p265-286.html
   My bibliography  Save this article

Exchange Values of Gold, Land, Physical Capital, and Human Capital in a Neoclassical Growth Model

Author

Listed:
  • Wei-Bin Zhang

    () (Ritsumeikan Asia Pacific University, 874-8577 Japan)

Abstract

Households of contemporary economies are characterized by many assets such as gold, silver, diamond, land, housing, physical wealth, in their portfolios. Yet modern dynamic economic theory has only a few mathematical models with physical wealth, land and gold based on microeconomic foundation. This study deals with portfolio choice equilibrium with land, gold and physical capital, and human capital within a general equilibrium framework. The growth determinants are endogenous physical and human wealth accumulation. The model studies dynamic interactions between land value, gold value, economic structural change, wealth accumulation and human capital growth by integrating the neoclassical growth theory, the Ricardian theory, and the Uzawa-Lucas model with Zhang’s utility function. The human capital accumulation is due to Arrow’s learning by doing, Uzawa’s learning through education, and Zhang’s learning through consuming (leisure creativity). We simulate the motion of the economic system and demonstrate the existence of a unique stable equilibrium point. Comparative dynamic analysis is conducted with regard to exogenous changes in the propensity to consume gold, the propensity to receive education, the propensity to consume housing, the propensity to save, and the population.

Suggested Citation

  • Wei-Bin Zhang, 2016. "Exchange Values of Gold, Land, Physical Capital, and Human Capital in a Neoclassical Growth Model," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 265-286, September.
  • Handle: RePEc:nwe:eajour:y:2016:i:3:p:265-286
    as

    Download full text from publisher

    File URL: http://www.unwe.bg/uploads/Alternatives/2-Zhang_broi_3_2016-en.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Deborah A. Cobb-Clark & Vincent A. Hildebrand, 2009. "The Asset Portfolios of Native-born and Foreign-born Australian Households," The Economic Record, The Economic Society of Australia, vol. 85(268), pages 46-59, March.
    2. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    3. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2008. "Inside the black box of regional development: human capital, the creative class and tolerance," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 615-649, September.
    4. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1.
    5. Mikael Lindahl & Alan B. Krueger, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December.
    6. Agell, Jonas & Edin, Per-Anders, 1990. " Marginal Taxes and the Asset Portfolios of Swedish Households," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(1), pages 47-64.
    7. Hans Brems, 1970. "Ricardo's Long-Run Equilibrium," History of Political Economy, Duke University Press, vol. 2(2), pages 225-245, Fall.
    8. Castelló-Climent, Amparo & Hidalgo-Cabrillana, Ana, 2012. "The role of educational quality and quantity in the process of economic development," Economics of Education Review, Elsevier, vol. 31(4), pages 391-409.
    9. Zhang Wei-Bin, 2016. "Gold And Land Prices With Capital Accumulation In An Economy With Industrial And Agricultural Sectors," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 16-29, April.
    10. Davis, Morris A. & Heathcote, Jonathan, 2007. "The price and quantity of residential land in the United States," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2595-2620, November.
    11. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    12. R. S. Uhler & J. G. Cragg, 1971. "The Structure of the Asset Portfolios of Households," Review of Economic Studies, Oxford University Press, vol. 38(3), pages 341-357.
    13. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters,in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
    14. Banerjee, Abhijit V., 2004. "Educational policy and the economics of the family," Journal of Development Economics, Elsevier, vol. 74(1), pages 3-32, June.
    15. Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 11-44, August.
    16. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1982. "Parental Preferences and Provision for Progeny," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 52-73, February.
    17. Kenneth J. Arrow, 1962. "The Economic Implications of Learning by Doing," Review of Economic Studies, Oxford University Press, vol. 29(3), pages 155-173.
    18. Zhang, Wei-Bin, 1993. "A woman's labor participation and economic growth : Creativity, knowledge utilization and family preference," Economics Letters, Elsevier, vol. 42(1), pages 105-110.
    19. Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2005. "Why Have Housing Prices Gone Up?," American Economic Review, American Economic Association, vol. 95(2), pages 329-333, May.
    20. Bordo, Michael David & Ellson, Richard Wayne, 1985. "A model of the classical gold standard with depletion," Journal of Monetary Economics, Elsevier, vol. 16(1), pages 109-120, July.
    21. Xavier Sala-I-Martin, 1997. "Transfers, Social Safety Nets, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 81-102, March.
    22. Chen, M. Keith & Chevalier, Judith A., 2008. "The taste for leisure, career choice, and the returns to education," Economics Letters, Elsevier, vol. 99(2), pages 353-356, May.
    23. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-546, June.
    24. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    25. Fernandez, Raquel & Rogerson, Richard, 1998. "Public Education and Income Distribution: A Dynamic Quantitative Evaluation of Education-Finance Reform," American Economic Review, American Economic Association, vol. 88(4), pages 813-833, September.
    26. Hans-Martin Von Gaudecker, 2015. "How Does Household Portfolio Diversification Vary with Financial Literacy and Financial Advice?," Journal of Finance, American Finance Association, vol. 70(2), pages 489-507, April.
    27. Lazear, Edward P, 1977. "Education: Consumption or Production?," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 569-597, June.
    28. Easterlin, Richard A., 1981. "Why Isn't the Whole World Developed?," The Journal of Economic History, Cambridge University Press, vol. 41(01), pages 1-17, March.
    29. Chappell, David & Dowd, Kevin, 1997. "A Simple Model of the Gold Standard," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 94-105, February.
    30. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    31. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    32. Barsky, Robert B & Summers, Lawrence H, 1988. "Gibson's Paradox and the Gold Standard," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 528-550, June.
    33. Jerik Hanushek & Dennis Kimko, 2006. "Schooling, Labor-force Quality, and the Growth of Nations," Educational Studies, Higher School of Economics, issue 1, pages 154-193.
    34. Nikolaj Malchow‐Møller & Søren Bo Nielsen & Jan Rose Skaksen, 2011. "Taxes, Tuition Fees, and Education for Pleasure," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(2), pages 189-215, April.
    35. Solow, Robert M., 2000. "Growth Theory: An Exposition," OUP Catalogue, Oxford University Press, edition 2, number 9780195109030.
    36. Luigi L. Pasinetti, 1960. "A Mathematical Formulation of the Ricardian System," Review of Economic Studies, Oxford University Press, vol. 27(2), pages 78-98.
    37. Kevin Dowd & Anthony A. Sampson, 1993. "A New Model of the Gold Standard," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 380-391, May.
    38. Wei-Bin ZHANG, 2015. "Land value dynamics with endogenous human and physical capital accumulation," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(602), S), pages 57-84, Spring.
    39. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Education; gold value; land value; human capital accumulation; wealth accumulation;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nwe:eajour:y:2016:i:3:p:265-286. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vanya Lazarova). General contact details of provider: http://edirc.repec.org/data/unweebg.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.