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Long-run Growth Rate (long-run + growth_rate)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	80%

Selected Abstracts

The non-linear dynamics of output and unemployment in the U.S.

JOURNAL OF APPLIED ECONOMETRICS, Issue 4 2001
Filippo Altissimo
This paper studies the joint dynamics of U.S. output and unemployment rate in a non-linear VAR model. The non-linearity is introduced through a feedback variable that endogenously augments the output lags of the VAR in recessionary phases. Sufficient conditions for the ergodicity of the model, potentially applying to a larger class of threshold models, are provided. The linear specification is rejected in favour of our threshold VAR. However, in the estimation the feedback is found to be statistically significant only on unemployment, while it transmits to output through its cross-correlation. This feedback effect from recessions generates important asymmetries in the propagation of shocks, a possible key to interpret the divergence in the measures of persistence in the literature. The regime-dependent persistence also explains the finding that the feedback from recession exerts a positive effect on the long-run growth rate of the economy, an empirical validation of the Schumpeterian macroeconomic theories. Copyright © 2001 John Wiley & Sons, Ltd. [source]

The phantom of liberty?: economic growth and the vulnerability of small states

JOURNAL OF INTERNATIONAL DEVELOPMENT, Issue 4 2002
Harvey W. Armstrong
This paper is concerned with the relationship between economic growth in small states and their vulnerability. A critical argument in much of the literature on small states, particularly small island states, is that their growth performance is greatly constrained by their vulnerability to exogenous shocks because of their size. These shocks include economic, political and environmental factors, which together dampen the long-run growth rate of these economies. The paper makes use of a global small state data set and appropriate quantitative techniques to test the relationship between growth and vulnerability using the results of Briguglio's Vulnerability Index. The results highlight some of the conceptual shortcomings in the analytical literature on small states, particularly islands, as well as suggesting that the Vulnerability Index is mis-specified. Copyright © 2002 John Wiley & Sons, Ltd. [source]

Growth Effects of Free Trade under Increasing Returns

THE JAPANESE ECONOMIC REVIEW, Issue 4 2002
Ilaria Ossella-Durbal
This paper addresses the long-term sustainability of the growth effects from trade, within the context of a dynamic optimization model where the investment sector exhibits an initial phase of increasing returns. It is proved that the qualitative properties of trade and growth remain valid, even for decreasing, rather than constant, returns to scale in the consumption sector. That is, trade enables an economy to escape a "poverty trap" and enjoy unbounded growth. Moreover, the asymptotic long-run growth rate of the optimal consumption levels with trade is determined, establishing that trade has a beneficial effect on long-run growth. JEL Classification Numbers: O41, F12. [source]

On Public Investment, the Real Exchange Rate and Growth: Some Empirical Evidence from the UK and the USA

THE MANCHESTER SCHOOL, Issue 3 2003
Sugata Ghosh
This study is based on a two-country endogenous growth model with optimizing agents, where public investment affects the real exchange rate and the long-run growth rate, and does so in a non-linear fashion. Non-parametric regression analysis of quarterly data from the UK and the USA suggests that there is a significant non-linear relationship between public investment and the real exchange rate, and also between public investment and the growth rate. This is also supported by our parametric generalized method of moments model that jointly determines the real exchange rate, growth rate and net foreign assets in terms of public investment. [source]

Effectiveness versus Efficiency: Growth-Accelerating Policies in a Model of Growth without Scale Effects

GERMAN ECONOMIC REVIEW, Issue 3 2006
Bettina Büttner
Endogenous growth; scale effects; welfare Abstract. Recent R&D growth models without strong scale effects imply that long-run growth rates depend only on parameters that are usually taken to be exogenous. However, integrating human capital accumulation into models of this type, Arnold (2002) demonstrates that subsidizing education accelerates growth. The present paper addresses welfare issues in Arnold's model. The main theoretical finding of the paper is that a system of subsidies that implements the optimal balanced growth path as a decentralized equilibrium includes zero subsidies to education, while R&D activity should be either subsidized or taxed. To shed further light on the latter result, the model is calibrated and it turns out that along the balanced growth path, the decentralized economy underinvests in R&D, i.e. R&D activities should be subsidized. [source]