When Economic Growth is Less than Exponential
University of Copenhagen - Department of Economics
University of Siegen - School of Economic Disciplines
Thomas Michael Steger
University of Leipzig/Institute for Theoretical Economics/Macroeconomics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
February 5, 2008
Economic Theory, Vol. 44, No. 2, 2010
This paper argues that growth theory needs a more general notion of “regularity” than that of exponential growth. We suggest that paths along which the rate of decline of the growth rate is proportional to the growth rate itself deserve attention. This opens up for considering a richer set of parameter combinations than in standard growth models. Moreover, it avoids the usual oversimplistic dichotomy of either exponential growth or stagnation. Allowing zero population growth in three different growth models (the Jones R&D-based model, a learning-by-doing model, and an embodied technical change model) serves as illustration that a continuum of “regular” growth processes fill the whole range between exponential growth and complete stagnation.
Keywords: Quasi-arithmetic growth, Regular growth, Semi-endogenous growth, Knife-edge restrictions, Learning by doing, Embodied technical change
JEL Classification: O31, O40, O41Accepted Paper Series
Date posted: August 8, 2010
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