Factor substitution, long‐run growth, and speed of convergence in the one‐sector convex endogenous‐growth model

2019 ◽  
Vol 71 (1) ◽  
pp. 2-21 ◽  
Author(s):  
Manuel A. Gómez
Keyword(s):  
Endogenous Growth ◽  
Growth Model ◽  
Speed Of Convergence ◽  
Long Run ◽  
Endogenous Growth Model ◽  
Factor Substitution ◽  
The One

EQUILIBRIUM DYNAMICS IN AN ENDOGENOUS GROWTH MODEL WITH HABIT FORMATION AND ELASTIC LABOR SUPPLY

2013 ◽  
Vol 19 (3) ◽  
pp. 618-642 ◽  
Author(s):  
Manuel A. Gómez
Keyword(s):  
Phase Diagram ◽  
Labor Supply ◽  
Endogenous Growth ◽  
Growth Model ◽  
Habit Formation ◽  
Global Dynamics ◽  
Long Run ◽  
Endogenous Growth Model ◽  
Elastic Labor Supply ◽  
Diagram Analysis

This paper analyzes the dynamics of an endogenous growth model with external habit formation and elastic labor supply. We first derive the conditions for the existence, uniqueness, and saddlepath stability of a feasible steady state with positive long-run growth. The global dynamics of the economy are characterized by phase-diagram analysis. Then we characterize the comparative static effects of shocks in preferences and production parameters analytically. The comparative dynamic effects of the shocks are characterized by phase-diagram analysis.

How to substitute in order to sustain: knowledge driven growth under environmental restrictions

1998 ◽  
Vol 3 (4) ◽  
pp. 425-442 ◽  
Author(s):  
LUCAS BRETSCHGER
Keyword(s):  
Sustainable Development ◽  
Natural Resources ◽  
Endogenous Growth ◽  
Growth Model ◽  
Adjustment Costs ◽  
Theoretical Framework ◽  
Endogenous Growth Model ◽  
The One

This paper presents different substitution mechanisms which determine, in a theoretical framework, the conditions for long-term sustainable development. In a one-sector approach and in two versions of a multi-sector endogenous growth model, the accumulation and the substitution of man-made inputs for natural resources are analysed. Assuming man-made capital to be an output of a specific sector of the economy, the elasticities of substitution between the different inputs play a more complex role than suggested by the one-sector approach. According to the multi-sector models, the prediction of growth becoming sustainable emerges as realistic, provided that the sectoral adjustment costs in the economy are not too high.

Long-Run Growth, Speed of Convergence and the Specification of Technology

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Manuel A. Gómez
Keyword(s):  
Growth Rate ◽  
Elasticity Of Substitution ◽  
Growth Speed ◽  
Speed Of Convergence ◽  
Long Run ◽  
Endogenous Growth Model ◽  
Asymptotic Speed ◽  
Production Technologies ◽  
The One ◽  
Parameter Values

AbstractThis note analyzes the effect that the specification of technology has on the long-run growth rate and the asymptotic speed of convergence in the one-sector endogenous-growth model. We compare three otherwise identical economies – with the same baseline and parameter values – but with different production technologies: CES, VES or Sobelow, respectively. The long-run growth rate and the asymptotic convergence speed under CES production are lower than the corresponding ones under Sobelow production which, in turn, are lower than those under VES production. This is because a higher elasticity of substitution entails a higher easiness to substitute capital for labor which, in the end, results in a higher long-run growth rate.

scholarly journals Factor accumulation and economic growth in Pakistan: incorporating human capital

2018 ◽  
Vol 45 (3) ◽  
pp. 480-491 ◽  
Author(s):  
Kashif Munir ◽  
Shahzad Arshad
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Human Capital ◽  
Endogenous Growth ◽  
Growth Model ◽  
Physical Capital ◽  
Content Type ◽  
Long Run ◽  
Endogenous Growth Model ◽  
Factor Accumulation

Purpose The purpose of this paper is to examine the long-run and short-run relationship between factor accumulation (i.e. physical capital and human capital) and economic growth by calculating the stocks of human capital and real physical capital. Design/methodology/approach The study uses endogenous growth model, where GDP per worker is the dependent variable and factor accumulation (real physical capital per worker and human capital) is the explanatory variable under the autoregressive distributive lag framework from 1973 to 2014 for Pakistan. Findings The results suggest that there is a long-run relationship between factor accumulation and GDP per worker in Pakistan. Findings of the study are consistent with the endogenous growth model suggesting that accumulation of human capital increases labor productivity, employment level and per capita income, and causes economic growth. Practical implications Developing countries like Pakistan should increase share of human capital for economic development. Government should invest in the education sector because investment in human capital has a large potential of productivity growth and welfare increase in developing countries. Originality/value This study challenges the notion of human capital and real physical capital stock used by different researchers. Considering human capital as a core factor of production, a series of human capital as average year of schooling is calculated by utilizing the perpetual inventory method.

LONG-RUN TAX INCIDENCE IN A HUMAN-CAPITAL-BASED ENDOGENOUS GROWTH MODEL WITH LABOR-MARKET FRICTIONS

2019 ◽  
pp. 1-42
Author(s):  
Been-Lon Chen ◽  
Hung-Ju Chen ◽  
Ping Wang
Keyword(s):  
Human Capital ◽  
Labor Market ◽  
Endogenous Growth ◽  
Growth Model ◽  
Tax Incidence ◽  
Labor Income ◽  
Market Participation ◽  
Long Run ◽  
Labor Market Frictions ◽  
Endogenous Growth Model

In a second-best optimal growth setup with only factor taxes, it is in general optimal to fully replace capital by labor income taxation in the long run. We revisit this important issue by developing a human-capital-based endogenous growth model with frictional labor search, allowing each firm to create multiple vacancies and each worker to determine market participation. We find that the conventional efficient bargaining condition is necessary but not sufficient for achieving constrained social optimality. We then conduct tax incidence exercises in balanced growth by calibrating to the U.S. economy with a preexisting 20% flat tax on capital and labor income. Our quantitative results suggest that, due to a dominant channel via the interactions between vacancy creation and market participation, it is optimal to switch only partially from capital to labor taxation in a benchmark economy where human-capital formation depends on both physical and human-capital stocks. This main finding is robust even along the transition with time-varying factor tax rates. Moreover, our quantitative analysis under alternative setups suggests that while endogenous human capital and labor-market frictions are essential for obtaining a positive optimal capital tax, endogenous leisure, nonlinear human-capital accumulation and endogenous growth are not crucial.

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