Dynamic General Equilibrium Theory Research Articles

Have China's exports improved the export technology level of the other BRICS countries? An empirical analysis based on data from SITC

PurposeThe purpose of this paper is to analyze whether China's exports can effectively improve the global competitiveness of other BRICS countries' exports from the perspective of intra-BRICS export trade.Design/methodology/approachThis paper extends the multinational trade model and analyzes the mechanism of the technological upgrading effect from the perspective of dynamic general equilibrium theory. In addition, this paper uses the export panel data of 217 products with three-digit SITC codes from China to other BRICS member countries from 2000 to 2016 and constructs a dynamic empirical model for parameter estimation.FindingsThe results show that China's exports to other BRICS member countries can effectively promote the technological improvement of other BRICS member countries' export products. In particular, the formal establishment of the BRICS organization in 2010 has significantly improved the efficiency of China's export technology optimization.Originality/valueIn the background of the prevalence of anti-globalization and the proliferation of protectionism, this paper proves that the deepening of trade cooperation between other BRICS members with China can help optimize their own international trade competitiveness and allow China's development dividend to benefit more countries and people.

Endogenous business cycles in a perpetual youth model with financial market imperfections**

AbstractAn economy in which entrepreneurs and financiers interact with each other through an imperfect financial market is investigated by applying a dynamic general equilibrium theory. In each period, there is a certain probability of each entrepreneur's life ending, and a certain number of entrepreneurs are newly born. Although entrepreneurs are potential capital producers, they receive an idiosyncratic productivity shock in each period. Therefore, entrepreneurs who draw higher productivity become capital producers and those who draw lower productivity become lenders. Financiers do not have an entrepreneurial talent for capital production, and thus they lend their assets in the financial market to acquire an interest income. In equilibrium, deterministic endogenous business cycles can occur at the intermediate level of financial constraints.

Envy and Inequality in Income and Wealth in a Dynamic General Equilibrium Theory

( Envidia y Desigualdad en el Ingreso y Riqueza en una Teoria del Equilibrio General Dinamico ) El objetivo de este estudio es abordar las interacciones entre la envidia, el crecimiento economico y la distribucion del ingreso y la riqueza en un modelo de crecimiento heterogeneo de los hogares con estructura economica. En cuanto a la envidia y su impacto, este estudio esta influenciado por el modelo economico con envidia de Gershman (2014). Nos ocupamos del papel (destructivo) de la envidia en la oferta de mano de obra, la distribucion del tiempo entre el trabajo y las actividades destructivas, y la distribucion de la riqueza y el ingreso. El modelo se enmarca en una teoria general del equilibrio general dinamico. La estructura economica se compone de un sector de bienes de consumo y un sector de bienes de capital. El movimiento se describe mediante un conjunto de ecuaciones diferenciales. Simulamos el movimiento de una economia de tres grupos con envidia endogena. Realizamos analisis dinamicos comparativos para mostrar como la envidia y otros cambios exogenos afectan los procesos transitorios y la estructura de equilibrio de la economia.

Corruption and Growth in a Dynamic General Equilibrium Model

This study introduces some new perspectives of bureaucratic corruption into the dynamic general equilibrium theory recently proposed by Zhang. The main concern of our study is the role of corruption on economic growth and income and wealth distribution between the officials and workers. The economy is composed of the industrial sector and public sector. The population is classified into officials and workers. Corruption takes places through many channels. Officials take brides from producers and households. The model describes dynamic interactions of growth, corruption with fixed tax rate and corruption rates. We simulate the model to demonstrate existence of equilibrium and motion of the dynamic system. We also examine effects of changes in different parameters on the motion of the economic system.

The Logic of Imitative Processes: Imitation as Secondary Innovation – an Axiomatic Schumpeterian Analysis

This paper offers an axiomatic analysis of the imitative activity of producers in a Schumpeterian process of innovative change. It argues that structural change in the economy is generated by leaders of radical innovation, whose actions trigger the diffusion of innovations, and whose strategies and innovations can be copied by imitators. As a consequence, these imitators become second-order innovators operating in a production system that is deprived of primary innovators. The paper demonstrates that increases in the number and variety of second-order innovators can intensify innovative changes throughout the production system. Furthermore, this logic can be reconstructed by reference to the research programme on modelling Schumpeterian innovative evolution within the Arrow-Debreu dynamic general equilibrium theory.

Income and wealth inequality with progressive income taxation in an integrated Walrasian-general equilibrium and neoclassical growth theory

This study develops a dynamic economic growth model of public goods in a dynamic general equilibrium theory for an open economy with heterogeneous households and progressive income taxation. The tax income is spent on supplying public goods. The economic system consists of one production sector and one public sector. The public sector is financially supported solely by the tax income. The model describes dynamic interactions between economic growth, wealth accumulation, progressive income taxation, and public services in an internationally open environment. The model is developed for any number of types of households. We simulate the model to demonstrate the existence of equilibrium and motion of the dynamic system. We also examine the effects of changes in different parameters on the motion of the economic system.

Income and wealth inequality with progressive income taxation in an integrated Walrasian-general equilibrium and neoclassical growth theory

This study develops a dynamic economic growth model of public goods in a dynamic general equilibrium theory for an open economy with heterogeneous households and progressive income taxation. The tax income is spent on supplying public goods. The economic system consists of one production sector and one public sector. The public sector is financially supported solely by the tax income. The model describes dynamic interactions between economic growth, wealth accumulation, progressive income taxation, and public services in an internationally open environment. The model is developed for any number of types of households. We simulate the model to demonstrate the existence of equilibrium and motion of the dynamic system. We also examine the effects of changes in different parameters on the motion of the economic system.

Confidence, Crashes and Animal Spirits

This article is an attempt to reformulate what I take to be two key insights from Keyness General Theory (Keynes, 1936). The first is that there is something profoundly different about the labour market from most other markets in the economy. The second is that the beliefs of participants in the asset markets have an independent influence on economic activity. In the language of modern dynamic general equilibrium theory, we would say that there is a continuum of labour market equilibria and that beliefs about the value of the stock market select an equilibrium. The General Theory contains many ideas, some of which are internally inconsistent, and Keynes did not try to reconcile his theory with Walrasian economics. That task was carried out by a group of interpreters, including Hansen (1936) and Hicks (1937). The current dominant paradigm, new-Keynesian economics, originated with the third edition of Samuelson’s (1955) undergraduate textbook in which he introduced the idea of the neoclassical synthesis. According to this doctrine, the economy is Keynesian in the short run but classical in the long run. The short run is defined as the period over which not all prices have had time to adjust to their Walrasian levels. This article introduces a different interpretation of the key ideas from the General Theory. 1 Although my work is inspired by Keynesian economics, this article is not about the history of thought. I offer a way of formulating the idea that market economies are not inherently self-stabilising without assuming that prices or wages are prevented from adjusting to their equilibrium levels by some kind of friction. Instead, I claim that high, persistent unemployment is a potentially permanent feature of a market economy in a steady-state equilibrium.

On the econometrics of world business cycles

Over the past 10 or 15 years, academic interest in business cycles has recovered to a level not matched perhaps since the 1930s. In his editorial statement in the first issue of Econometric8 in 1933, Ragnar Frisch not only introduced a new word, econometrics, which he defined as quantitative economic theory, but also listed business cycle theory among four fields of particular interest to econometricians. This inclusion reflected the views not only of Frisch, but also of Hayek (1931). Tinbergen (1935), and others. This interest waned, however, in the 1950s and 1960s. A major factor leading to its reawakening was the paper by Robert Lucas (1977) on Understanding Business Cycles. Perhaps this course of events was not surprising. A prerequisite for making much progress in this field was dynamic general equilibrium theory. By the 1970s, the basic theory had been developed, and neoclassical growth theory evolved as the dominant framework for business cycle analysis.

Equilibrium models displaying endogenous fluctuations and chaos: A survey

This paper surveys current developments in dynamic general equilibrium theory concerned with conditions under which endogenous fluctuations are possible. Existing contributions are divided into two classes: the larger one consists of models with a unique perfect-foresight equilibrium, while the second includes models where equilibrium is indeterminate and the set of equilibria involving endogenous fluctuations includes ‘sunspots equilibria’. While the two classes of models involve oscillations of different natures and with different policy implications, we show that both are consistent with optimizing behavior and competitive equilibrium.