http://individual.utoronto.ca/zheli/sa1.pdf

On the mechanics of economic development

This paper examines whether the Solow growth model is consistent with the international variation in the standard of living. It shows that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data. The paper also examines the implications of the Solow model for convergence in standards of living, that is, for whether poor countries tend to grow faster than rich countries. The evidence indicates that, holding population growth and capital accumulation constant, countries converge at about the rate the augmented Solow model predicts. This paper takes Robert Solow seriously. In his classic 1956 article Solow proposed that we begin the study of economic growth by assuming a standard neoclassical production function with decreasing returns to capital. Taking the rates of saving and population growth as exogenous, he showed that these two vari- ables determine the steady-state level of income per capita. Be- cause saving and population growth rates vary across countries, different countries reach different steady states. Solow's model gives simple testable predictions about how these variables influ- ence the steady-state level of income. The higher the rate of saving, the richer the country. The higher the rate of population growth, the poorer the country. This paper argues that the predictions of the Solow model are, to a first approximation, consistent with the evidence. Examining recently available data for a large set of countries, we find that saving and population growth affect income in the directions that Solow predicted. Moreover, more than half of the cross-country variation in income per capita can be explained by these two variables alone. Yet all is not right for the Solow model. Although the model correctly predicts the directions of the effects of saving and

/pdf/a-contribution-to-the-empirics-of-economic-growth-27cl5gkqam.pdf

A Contribution to the Empirics of Economic Growth

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.

/pdf/endogenous-technological-change-4yzdlw043b.pdf

Endogenous Technological Change

Existing strategies for econometric analysis related to macroeconomics are subject to a number of serious objections, some recently formulated, some old. These objections are summarized in this paper, and it is argued that taken together they make it unlikely that macroeconomic models are in fact over identified, as the existing statistical theory usually assumes. The implications of this conclusion are explored, and an example of econometric work in a non-standard style, taking account of the objections to the standard style, is presented. THE STUDY OF THE BUSINESS cycle, fluctuations in aggregate measures of economic activity and prices over periods from one to ten years or so, constitutes or motivates a large part of what we call macroeconomics. Most economists would agree that there are many macroeconomic variables whose cyclical fluctuations are of interest, and would agree further that fluctuations in these series are interrelated. It would seem to follow almost tautologically that statistical models involving large numbers of macroeconomic variables ought to be the arena within which macroeconomic theories confront reality and thereby each other. Instead, though large-scale statistical macroeconomic models exist and are by some criteria successful, a deep vein of skepticism about the value of these models runs through that part of the economics profession not actively engaged in constructing or using them. It is still rare for empirical research in macroeconomics to be planned and executed within the framework of one of the large models. In this lecture I intend to discuss some aspects of this situation, attempting both to offer some explanations and to suggest some means for improvement. I will argue that the style in which their builders construct claims for a connection between these models and reality-the style in which "identification" is achieved for these models-is inappropriate, to the point at which claims for identification in these models cannot be taken seriously. This is a venerable assertion; and there are some good old reasons for believing it;2 but there are also some reasons which have been more recently put forth. After developing the conclusion that the identification claimed for existing large-scale models is incredible, I will discuss what ought to be done in consequence. The line of argument is: large-scale models do perform useful forecasting and policy-analysis functions despite their incredible identification; the restrictions imposed in the usual style of identification are neither essential to constructing a model which can perform these functions nor innocuous; an alternative style of identification is available and practical. Finally we will look at some empirical work based on an alternative style of macroeconometrics. A six-variable dynamic system is estimated without using 1 Research for this paper was supported by NSF Grant Soc-76-02482. Lars Hansen executed the computations. The paper has benefited from comments by many people, especially Thomas J. Sargent

/pdf/macroeconomics-and-reality-3v6kkpl8jz.pdf

Macroeconomics and reality

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported, and instead, the equilibriumis one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.

https://papers.ssrn.com/sol3/Delivery.cfm/nber_w3210.pdf?abstractid=226703&mirid=1

Nobel Lecture, December 8, 1987: Growth Theory and After 1. Characteristics of Steady States 2. A Variable Capital/Output Ratio 3. A Model without Direct Substitution 4. A Model with Two Assets 5. Economic Policy in a Growth Model 6. Aspects of Economic Policy Intermezzo 7. The Standard Model Once More 8. Human Capital: The Lucas Model 9. Endogenous Technology: The Romer Model 10. New Consumer Goods: Grossman and Helpman 11. Schumpeterian Ideas: Aghion and Howitt 12. Lessons and Suggestions for Aggregative Growth Theory Bibliography

Growth Theory: An Exposition

Does fiscal policy matter

The dominance in neo-classical economic teaching of the concept of a production function, in which the relative prices of the factors of production are exhibited as a function of the ratio in which they are employed in a given state of technical knowledge, has had an enervating effect upon the development of the subject, for by concentrating upon the question of the proportions of factors it has distracted attention from the more difficult but more rewarding questions of the influences governing the supplies of the factors and of the causes and consequences of changes in technical knowledge. Moreover, the production function has been a powerful instrument of miseducation. The student of economic theory is taught to write 0 f f (L, C) where L is a quantity of labour, C a quantity of capital and 0 a rate of output of commodities.' He is instructed to assume all workers alike, and to measure L in man-hours of labour; he is told something about the index-number problem involved in choosing a unit of output ; and then he is hurried on to the next question, in the hope that he will forget to ask in what units C is measured. Before ever he does ask, he has become a professor, and so sloppy habits of thought are handed on from one generation to the next. The question is certainly not an easy one to answer. The capital in existence at any moment may be treated simply as \" part of the environment in which labour works.\"2 We then have a production function in terms of labour alone. This is the right procedure for the short period within which the supply of concrete capital goods does not alter, but outside the short period it is a very weak line to take, for it means that we cannot distinguish a change in the stock of capital (which can be made over the long run by accumulation) from a change in the weather (an act of God). We may look upon a stock of capital as the specific list of all the goods in existence at any moment (including work-in-progress in the pipe lines of production). But this again is of no use outside the strict bounds of the short period, for any change in the ratio of capital to labour involves a re-organisation of methods of production and requires a change in the shapes, sizes and specifications of many or all the goods appearing in the original list. 3 As soon as we leave the short period, however, a host of difficulties appear. Should capital be valued according to its future earning power or its past costs ? When we know the future expected rate of output associated with a certain capital good, and expected future prices and costs, then, if we are given a rate of interest, we can value the capital good as a discounted stream of future profit which it will earn. But to do so, we have to begin by taking the rate of interest as given, whereas the main purpose of the production function is to show how wages and the rate of interest (regarded as the wages of capital) are determined by technical conditions and the factor ratio.

The Production function and the Theory of Capital

One-sector growth models technological change in the one-sector model money and economic growth a preview of multisector growth models Leontief models and alternative techniques neoclassical multisector models without joint production turnpike theorems and efficient economic growth optimal economic growth.

Mathematical Theories of Economic Growth

Eventually, you will certainly discover a further experience and capability by spending more cash. nevertheless when? do you assume that you require to acquire those all needs in imitation of having significantly cash? Why don't you attempt to get something basic in the beginning? That's something that will lead you to comprehend even more all but the globe, experience, some places, similar to history, amusement, and a lot more?

Robert M. Solow

Papers

Growth Theory: An Exposition

Does fiscal policy matter

The Production function and the Theory of Capital

Mathematical Theories of Economic Growth

Linear Programming and Economic Analysis.