On the Dynamics of Economic Growth

Author/Editor:

Michael Sarel

Publication Date:

November 1, 1994

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines the dynamics of economic growth. First, it demonstrates that the standard neoclassical growth model with constant elasticity of intertemporal substitution is not consistent with the patterns of development we observe in the real world, once we consider the initial conditions. Second, it examines an alternative growth model, which is consistent with endogenously determined initial conditions and also generates dynamics that are in accord with the historical patterns of growth rates, capital flows, savings rates and labor supply. The alternative model is a generalized version of the neoclassical growth model, with increasing rates of intertemporal substitution due to a Stone-Geary type of utility.

Series:

Working Paper No. 1994/138

Subject:

Capital adequacy requirements Consumption Income Neoclassical theory Technological innovation

English

Publication Date:

November 1, 1994

ISBN/ISSN:

9781451855951/1018-5941

Stock No:

WPIEA1381994

Pages:

34

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