Growth Rate Of Capital Stock Research Articles

Effects of wariness on economic growth in overlapping generations models

We introduce the notion of wariness, defined as a concern for the lowest lifetime utility, in overlapping generations models and explore its effects on economic growth. In an exogenous growth model, under standard assumptions, we prove that the capital stock converges to a steady state. We then explore conditions under which this steady state is increasing (or decreasing) in the wariness level. We also provide a necessary and sufficient condition for the dynamic efficiency of the intertemporal equilibrium. In endogenous growth models (à la Romer (1986) or à la Barro (1990)), we show that the growth rate of capital stock per capita in the economy with wariness is lower (higher, respectively) than that in the economy without wariness if and only if the capital return is high (low, respectively).

Impact of Risk Aversion on Optimal Market Integration

This paper examines the equilibrium growth rate of capital stock and social welfare under an infinite-horizon economy with productivity shocks. The analysis is conducted in an international context where the volatility of production is assumed to be endogenously determined by the degree of market integration. The evidence suggests that when risk aversion is high, endogenous productivity risks can induce precautionary savings and the over-accumulation of capital stock, whereas spillovers from integrated markets are conducive to the under-accumulation of capital stock. Only in this case does a unique equilibrium exist in which partial market integration contributes to growth and social welfare. When risk aversion is low, there exist multiple equilibria depending on the degree of market integration, and full market integration is desirable for social welfare. The model gives an explanation of the withdrawal of the United Kingdom from the European Union as an example of rational market participation decisions.

Wage-led ou profit-led? Análise das estratégias de crescimento das economias sob o regime de metas de inflação, câmbio flexível, mobilidade de capitais e endividamento externo

Neste artigo apresentamos um modelo macrodinâmico de inspiração pós-keynesiana com o objetivo de analisar os efeitos da abertura da conta de capitais sobre a performance macroeconômica das economias em desenvolvimento. Neste particular, os exercícios de estática comparativa mostram que um aumento do endividamento externo pode ter efeitos benéficos para a economia no curto prazo, uma vez que induz o aumento do grau de utilização da capacidade produtiva e da taxa de crescimento do estoque de capital. No entanto, a dinâmica de longo prazo mostra que, sob certas condições, o acesso ao mercado internacional de capitais pode gerar trajetórias explosivas para o sistema econômico, notadamente em um contexto em que a política monetária é conduzida com base em um regime de metas de inflação. Além disso, demonstra-se que uma redução da meta de inflação perseguida pelo Banco Central, dentro do contexto de abertura da conta de capitais e de captação externa por parte das empresas, pode gerar um aumento permanente da taxa real de juros, bem como um aumento do próprio custo do endividamento externo da economia contribuindo, assim, para uma maior fragilidade externa. Ademais, analisou-se a consistência das estratégias de crescimento das economias desenvolvidas e em desenvolvimento. No geral, os resultados encontrados mostram a validade da Lei de Thirlwall, de modo que o regime de crescimento das economias depende, em última análise, das restrições impostas pelas elasticidades-renda das importações e exportações.

ACUMULAÇÃO DE CAPITAL, ABERTURA FINANCEIRA E ENDIVIDAMENTO EXTERNO: UM MODELO MACRODINÂMICO PÓS-KEYNESIANO COM CÂMBIO FLEXÍVEL E MOBILIDADE DE CAPITAIS

Neste artigo apresentamos um modelo macrodinâmico de inspiração pós-keynesiana com o objetivo de analisar os efeitos da abertura da conta de capitais sobre a performance macroeconômica das economias em desenvolvimento. Nesse particular, os exercícios de estática comparativa mostram que um aumento do endividamento externo pode ter efeitos benéficos para a economia em curto prazo, uma vez que induz o aumento do grau de utilização da capacidade produtiva e da taxa de crescimento do estoque de capital. No entanto, a dinâmica de longo prazo mostra que, sob certas condições, o acesso ao mercado internacional de capital pode gerar trajetórias explosivas para o sistema econômico, notadamente num contexto em que a política monetária é conduzida com base num regime de metas de inflação. Além disso, demonstra-se que uma redução da meta de inflação perseguida pelo Banco Central pode gerar um aumento permanente da taxa real de juros, bem como um aumento do endividamento externo da economia, contribuindo, assim, para uma maior fragilidade externa.

The Non-Farm Rate of Profit and the Thai Economic Development: 1970–2010

The article measures the non-farm profit rate in Thailand from 1970 to 2010. The shape of the profit rate suggests that the Thai economy can be differentiated into four phases. The decomposition analysis reveals that the organic composition of capital has greatly contributed to fluctuations of the profit rate, while the rate of capacity utilization and the capacity—capital ratio have positive impacts in three out of four phases. Meanwhile, the profit share and the rate of surplus value have just slight impacts on the profit rate. Furthermore, the article discusses that the capitalist class has always been a dominant class who could benefit from economic development, and the profit rate determines the growth rate of capital stock in Thailand.

English

This article analyzes the fiscal sustainability of the Brazilian economy in recent decades. It evaluates the solvency of public debt in Brazil through the cointegration tests that showed a long-term relationship between public revenue and expenditure in the period of 1975 (I) to 2010 (II). The results show a solvency ratio between the Revenue / GDP ratio and expense / GDP ratio. That is, for each $ 1.00 spent per unit of product, one gets a return of $ 1, 0078 of revenue collected per unit of product. On the other hand, the total revenue and total expenditure (deflated by the IGP-DI) do not pass through the solvency test if revenue from seigniorage is not included, that is, for each $ 1.00 spent deflated by the IGP-DI, one gets a return of $ 0, 9922 of revenue collected deflated by the IGP-DI, a value less than $ 1.00. Furthermore, fiscal sustainability tests for the period 1964 to 2008 reveal two important results: i) an increase in debt/capital stock ratio negatively affects the growth rate of capital stock and also negatively affects the growth rate of the product; ii) fiscal policy is weakly sustainable which could lead to a possible problem of insolvency. Key words: Fiscal solvency, fiscal sustainability, debt/capital stock ratio.

Economic Growth and the Quality Composition of Human Capital

There are contradictory views in the literature regarding the relationship between education and economic growth. According to Lucas (1988), accumulation of human capital over time that boosts economic growth, whereas Nelson and Phelps (1966) argue that the stock of human capital is important for economic growth. Romer (1990a) concludes that if stock of human capital is employed in the research sector, technological progress is greater and this leads to faster growth. Several empirical studies have been carried out on the nature of the relationship between human capital. Also whether quality composition of human capital is important for growth or not has also been dealt with in the literature but there are some problems with the treatment. This study relates to the relationship between quality composition of human capital and technological change and the mechanism through which technological change affects long run growth rates. This study relates to 55 countries over fourteen year periods from 1980 to 2007. We find that the average stock of human capital is important to increase economic growth. Stock of average human capital affects economic growth through its effect on growth rate of capital stock. However the stock of tertiary educated persons is not a significant determinant of growth but stock of secondary and primary educated persons are important. This may suggest that the stock of skilled labour affects the rate of technological change primarily through diffusion of technology and not through R&D activity in the economy. Secondary or primary schooling which is necessary to absorb existing technologies but probably not sufficient for R&D activity turns out to be a significant determinant of growth rate of output. In this study, stock of human capital affects economic growth through its effect on capital productivity as well as technological diffusion.

Incomplete market participation, endogenous endowment risks and welfare

This paper investigates the equilibrium growth rate of capital stock and social welfare when risk-sharing externalities are incorporated into the infinite-horizon model where endowment risks are endogenized by the degree of incomplete market participation. There exist Nash equilibria depending on the degree of market participation. Under equilibrium with incomplete market participation, the endowment risks cannot be fully diversified as they induce precautionary savings and the over-accumulation of capital stocks while spillover effects on production technologies lead to the under-accumulation of capital stocks. This may have desirable effects on economic growth and improve social welfare.