Search

This article investigates the nature of paths in the standard neoclassical aggregative model of economic growth that are maximal according to the Suppes-Sen grading principle. This is accomplished by relating such paths to paths which are utilitarian maximal when an increasing (but not necessarily concave) utility function evaluates each period's consumption. Dynamic properties of Suppes-Sen maximal paths, which lie entirely above or entirely below the golden-rule, are analyzed. An example is presented in which an explicit form of a consumption function is described, which generates only Suppes-Sen maximal paths. This consumption function is shown to generate consumption cycles, and violate the Pigou-Dalton transfer principle. [ABSTRACT FROM AUTHOR]

Previous research has shown that trust alters input efficiencies across countries, which is suggestive of parameter heterogeneity. In this paper, trust's role in parameter heterogeneity is further explored within the context of the neoclassical growth model. This heterogeneity creates a nonlinear regression specification, which is estimated using a Metropolis within Gibbs algorithm. Results show that country-level trust differences cause human capital's exponent to vary by 43% and physical capital's exponent to vary by 29% across countries. This trust-induced parameter heterogeneity has important implications for various aspects of the development process. Under higher trust levels, the responsiveness of output per worker to changes in savings is increased by as much as 52%. In addition, this parameter heterogeneity also serves to mitigate untenably high implied rates of rate return differences between the US and other countries. [ABSTRACT FROM AUTHOR]

It is crystal clear that the neoclassical economical theory, despite being probably the best growth model ever invented by man, tickled a cost of environmental degradation which can threaten our wealth and even our existence. For this reason, the concept of sustainable development (SD) is so empathic, being considered probably the best theoretical alternative invented by man to standard growth, because of its vision of a better world, where economics, society and environment are intimately linked. Thus, all human activities have to adapt to this new paradigm, in order to achieve its goals. From the economical perspective, production, consumption and trade must incorporate a kind of sustainable type of activity. In the recent years, growing demands in energy use and the increase of oil and coal prices, have led to the usage of new energy sources such as biomass, water, solar, wind and geothermal energy. This is why we propose in this paper to present an overview of international trade in biomass reported to the philosophy of SD. In short, we want to give an answer at two questions: how much is biomass trade sustainable and what risks may arise if the main source of energy used today, based on fossil fuels, will be totally substitute by biomass? To be sustainable, biomass, must meet certain criteria, such as: to possess a high capacity for regeneration, in a relatively short time; to offer a better efficiency compared with the traditional fossil fuel sources; to be less or non-polluting, to be used in solid, liquid and gaseous form; to have a broad applicability in production and consumption; to have a competitive level in terms of costs and prices for transport or storage, in both stages, as a raw material or as a finished product; to be a good substitute of traditional fuels (gasoline or diesel), without the necessity for structural changes of the of the engine. The article will conclude that the uprising trend of the EU biomass trade and consumption will continue, because of grown concerns of the EU Member States regarding the effects that greenhouse gas emissions have over the environment and over the quality of life standard, despite the critics which states that biomass production may have negative environmental effects, leading to massive deforestation and destruction of soil, water sources and natural habitat. [ABSTRACT FROM AUTHOR]

Although industrialization first occurred in England, it is thought that China, not England, may have been the world leader in technology at the time. Yet, China did not industrialize until 150 yr after England and nearly a century after less advanced European countries. This represents a puzzle because two-sector neoclassical growth models, such as Hansen and Prescott (2002) , that accurately match industrialization, require that more technologically advanced countries industrialize at an earlier date. I find that a model that accounts for cross-country heterogeneities in population density accurately predicts the timing of industrialization in China. ( JEL F43, N10, N30, O11, O14, O41) [ABSTRACT FROM AUTHOR]

The article focuses on the international flow of capital between 1880 to 1913, the "golden era" of finance, as well as during the interwar period of 1918 to 1938. Using an open-economy growth model, the authors use neoclassical growth theories to analyze variables including consumption, nonmarket time, domestic capital, and productivity. The relationship between bond returns and countries whose economies rely on either imports or exports is explored. Economic data for countries including the U.S., Finland, Great Britain, and Austria is considered.

This paper studies industry-level dynamics and demonstrates the ability of a modified neoclassical growth model to capture a range of empirical facts. The paper begins by using U.S. data to document skilled and unskilled labor trends within industry sector classifications as well as industry sector output trends. Using Current Population Survey data from 1968 to 2004, it is shown that the ratio of skilled workers to unskilled workers employed has risen in all industries. The absolute increase in this ratio was larger in the more skilled industries, while the growth rate was larger in the less skilled industries. Furthermore, using national income account data, it is shown that relatively high-skilled industries have accounted for an increasing share of output over time. A version of the neoclassical growth model is then constructed to match these observations. One important feature of this model is a structure that introduces new goods into the economy at each moment of time. The model is able to capture a rich set of labor market movements between sectors and between skill levels as well as changes in the relative output shares across industries, yet preserves many nice features of the neoclassical growth model.( JEL E13, J20, 030) [ABSTRACT FROM AUTHOR]