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Finite Lifetimes, Population, and Growth

Listed author(s):
  • Bharat Diwakar
  • Gilad Sorek

This work highlights principle differences in the predictions of R&D-based growth theory derived from the infinite horizon framework and the Overlapping Generations (OLG) framework of finitely living agents. In particular we show that the counterfactual positive effect of population growth on output growth presented in the second and third generation R&D-based growth models is eliminated in the corresponding OLG framework with finitely living agents. These differences arise because of the limiting effect of labor income on saving that presents only in the OLG framework. Our results indicate that the counterfactual relations between population and output growth rates presented in current R&D-based growth models are driven by their specific demographic structure.

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File URL: http://cla.auburn.edu/econwp/Archives/2015/2015-14.pdf
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Paper provided by Department of Economics, Auburn University in its series Auburn Economics Working Paper Series with number auwp2015-14.

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Date of creation: Sep 2015
Handle: RePEc:abn:wpaper:auwp2015-14
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Phone: (334) 844-4910
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Web page: http://cla.auburn.edu/economics/

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  7. Dalgaard, Carl-Johan & Jensen, Martin Kaae, 2009. "Life-cycle savings, bequest, and a diminishing impact of scale on growth," Journal of Economic Dynamics and Control, Elsevier, vol. 33(9), pages 1639-1647, September.
  8. Angus Chu & Guido Cozzi & Chih-Hsing Liao, 2013. "Endogenous fertility and human capital in a Schumpeterian growth model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(1), pages 181-202, January.
  9. Peretto, Pietro F, 1998. "Technological Change and Population Growth," Journal of Economic Growth, Springer, vol. 3(4), pages 283-311, December.
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  11. Alberto Bucci, 2015. "Product Proliferation, Population, and Economic Growth," Journal of Human Capital, University of Chicago Press, vol. 9(2), pages 170-197.
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  16. Philippe Aghion & Peter Howitt, 2009. "The Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 9780262012638, July.
  17. Prettner, Klaus, 2014. "The non-monotonous impact of population growth on economic prosperity," Economics Letters, Elsevier, vol. 124(1), pages 93-95.
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