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On the system-theoretical foundations of non-economic parameter constancy assumptions in economic growth modeling

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  • Stijepic, Denis

Abstract

In general, positive/quantitative growth models assume that (some of) the model parameters that are determined in non-economic systems are exogenous and constant. Such non-economic parameter constancy assumptions (abbr. ‘NEPCAs’) are not necessarily consistent with the empirical evidence on significant cross-system interactions and, in particular, long-run interactions between the economic system and the non-economic systems (e.g. socio-cultural, political, and ecological system). We derive the system-theoretical/mathematical conditions under which NEPCAs are good approximations of cross-system interactions in economic growth models: we (a) discuss the standard types of dynamic equilibrium and the problems that arise when using them to justify NEPCAs in economic long-run models (in presence of cross-system interactions), (b) formulate an equilibrium type (a ‘stable partial dynamic equilibrium’) that solves these problems, and (c) demonstrate the applicability of this equilibrium type as a foundation of the NEPCAs used in the AK growth model. Finally, we discuss some topics for further research.

Suggested Citation

  • Stijepic, Denis, 2017. "On the system-theoretical foundations of non-economic parameter constancy assumptions in economic growth modeling," MPRA Paper 82699, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:82699
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    Cited by:

    1. Stijepic, Denis, 2018. "A contribution to the qualitative, interdisciplinary modeling of environmental development," MPRA Paper 88953, University Library of Munich, Germany, revised 12 Sep 2018.
    2. Stijepic, Denis & Wagner, Helmut, 2017. "On cross-system interactions and the sustainability of (economic) development," MPRA Paper 86147, University Library of Munich, Germany, revised 11 Apr 2018.

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    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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