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This study aims to construct a sound theory of consumption convergence and empirically test its viability. To do this, we employ a Solovian framework in which the Keynesian exogenous savings-consumption allocation rule plays a crucial role. We demonstrate that consumption convergence performance is determined by both the average propensity to save (the indirect effect) and the average propensity to consume (the direct effect). In the empirical section, we use a system GMM estimator to test our consumption convergence equation on a panel data set of 177 countries and four income groups from 1970 to 2019. Our empirical findings indicate (i) absolute consumption convergence within high- and low-income country groups; (ii) strong evidence of conditional consumption convergence within high-, upper-middle-, and lower-middle-income groups; (iii) a robust and significant effect of the average propensity to save on the convergence process in high-, upper-middle-, and lower-middle-income groups; and (iv) a more robust and significant effect of the average propensity to consume in upper-middle- and lower-middle-income countries. In summary, we find that as income rises, the indirect impact plays a larger role in explaining consumption convergence, whereas the direct effect plays a smaller role. The policy implication of this conclusion is that policy makers in upper-middle- and lower-middle-income countries should restore the balance in the tradeoff between current and future consumption in favor of savings, as the former will harm consumption convergence within each middle-income group. [ABSTRACT FROM AUTHOR]

The aim of the study is to increase the power of the model to explain the slowdown in the growth rate of high-income countries by adding the elderly population per worker variable to the Solow model and to reveal the effect of the accumulation of the elderly population on the steady state. We believe that this study is a first with this feature and will make a significant contribution to the literature. In the study, panel data analysis was conducted with the mean group dynamic least squares (DOLSMG) method using the annual data of 25 highincome countries for the period 1995-2021. It was found that one unit increase in capital per worker increases output per worker by 0.504, one unit increase in elderly population per worker reduces output per worker by -0.241, and accumulation in the elderly population leads to a steady state at lower actual investment per worker and output per worker. The findings obtained were compatible with economic theory, as expected. Policies such as good management of the demographic transition process, encouraging women's participation in the workforce, preferring capital-intensive production, lengthening the retirement age, and encouraging post-retirement work have been suggested as solution the problem arising from aging. [ABSTRACT FROM AUTHOR]

In previous analyses of regional underdevelopment, aspects such as technological progress, the implications of growth theory, depreciation (especially capital), capital input, and technology input have been completely ignored. Desmet and Ortίn analyze rational underdevelopment using a Ricardian model. This study investigates the underdevelopment of regions in the light of the Solow model. Two regions with two sectors are considered for the model. The regions are characterized by different technological equipment. The first region is industrial. The second region has an agricultural character. When a new technology is available, both regions can benefit under certain conditions. Financial transfers between regions equalize incomes. The security of transfer payments is positive; the increase in income levels without an increase in productivity is negative. The regions have different depreciation rates, factors, and technology endowments. Enlargement to a growth theoretical model framework (Solow model) should demonstrate the effects of an economy's investments, constant depreciation rates, population growth, and technological progress. This will make it possible to see how the new influencing factors influence the utility of the two regions. [ABSTRACT FROM AUTHOR]

Copyright of Acta Universitatis Lodziensis. Folia Oeconomica is the property of Wydawnictwo Uniwersytetu Lodzkiego and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose – The principal aim of this paper is to review three basic theoretical growth models, namely the Harrod-Domar model, the Solow model and the Ramsey model, and examine their implications for economic policies. Design/methodology/approach – The paper utilizes a positivist research framework that emphasizes the causal relationships between the variables in each of the three models. Mathematical methods are employed to formulate and examine the three models under study. Since the paper is theoretical, it does not use any empirical data although numerical illustrations are provided whenever they are appropriate. Findings – The Harrod-Domar model explains why countries with high rates of saving may also enjoy high rate of economic growth. Both the Solow and Ramsey models can be used to explain the medium-income trap. The paper examines the impact of Covid shocks on the macroeconomy. While the growth rate can be recovered, it may not always possible to recover the output level. Research limitations/implications – For the Harrod-Domar model, the public spending decreases the private consumption at the period 1, but there is no change in the capital stock and hence the production in subsequent periods. For the Ramsey model with AK production function, both the private consumption and the outputs will be lowered. In both the Harrod-Domar and Ramsey models with Cobb-Douglas production function, if the debt is not high and the interest rate is sufficiently low, it is better to use public debt for production rather than for consumption. If the country borrows to recover the Total Factor Productivity after the Covid pandemic, both the Harrod-Domar and Ramsey models with Cobb-Douglas production function show that the rate of growth is higher for the year just after the pandemic but is the same as before the pandemic. Practical implications – The economy can recover the growth rate after a Covid shock, but the recovery process will generally take many periods. Social implications – This paper focuses on economic implications and does not aim to examine social implications of policy changes or Covid-type shock. Originality/value – The paper provides a comparison of three basic growth models with respect to public spending, public debts and repayments and Covid-type shocks.

Oil is Ecuador's main export product and its financial income an important part of the General State Budget. Being Ecuador a country dependent on crude oil is the reason why this investigation is carried out. For this purpose, an investigation with a quantitative approach was used, with a descriptive and explanatory scope strengthened in the Solow model, for which an econometric model with time series data was estimated using the Ordinary Least Squares (OLS) method. The results show that oil barrel exports have a positive effect on economic growth. Likewise, it is concluded that oil imports, the price of oil, will have a greater dynamism in economic growth, since there is a strong causality with the aforementioned variables.

The effects of technical change may not exclusively be labour-augmenting, if it is assumed that linear homogeneity or balanced growth is not applicable. This study identified these effects on the steady-state output growth from labour, capital and scale-augmenting technological progress. The findings imply that a drop in investment-goods prices accelerates output growth but to a lesser extent than capital growth, and increasing (decreasing) returns to scale (IRS/DRS) will lead to faster (slower) per-capita output growth, but the effect is free from constant returns to scale (CRS). It was also found that a higher output elasticity of capital can be beneficial to output growth and that a substantial labour supply is conducive to higher income per capita under IRS but will reduce it if DRS are present, but again, CRS does not occur. Differentiating between labour and capital augmentations in empirical research is challenging, as a direct estimation of the impacts of technical change on output growth is impossible. Thus, an indirect estimation was conducted to measure these impacts as a Solow residual. [ABSTRACT FROM AUTHOR]

The described model of economic growth under conditions of an epidemic does not directly refer to the social and economic situation in the years 2020 and 2021, i.e. to the COVID-19 pandemic. It is aimed to identify the consequences of any epidemic leading to severe social losses (high percentages of the infected and dead, limited interpersonal contacts as a result of lockdown, a lowered level of general individual and social well-being) and economic losses (a fall in production as a result of the collapse of aggregate demand and a reduction in the supply capacity of the economy, and consequently a decreased rate of capital accumulation). The described epidemiological-economic model combines the SIR epidemiological model from 1927 (with its modification proposed in 2020 by Bärwolff) and the neoclassical growth model proposed by Solow in 1956. The authors expanded the concept by lockdown restrictions with various levels of their severity, considering specific rules for their implementation, and by guidelines for scenario analyses of changes in the value of social and economic activity index, in the value of aggregate production, in the capital stock accumulated in the economy and in social utility. The effect of an epidemic on mediumterm economic growth was also considered, for various levels of economic development (measured by the distance of input capital stock from that formed in a long-term equilibrium in the Solow model). The principal conclusions drawn from the discussion are listed below. First, the introduction of the same restrictions imposed on social and economic activity throughout the territory of a country poses a considerable risk of error in assuming a uniform spread of the epidemic. Second, a rapid introduction of lockdown measures has a stronger effect on accumulated social and economic activity than a continual process of gradual imposing and lifting restrictions on that activity. Third, a scenario of a rapidly imposed severe lockdown has the most drastic consequences for the economy, causing both the sharpest drop in production, the longest time of remaining on the path of relatively lowest growth, and the most dramatic expected accumulated decrease in production. Similar conclusions are drawn as to the changes in social utility. [ABSTRACT FROM AUTHOR]

Objectives This paper is about to review some key weakness of the Solow model, when it is applied to less developed economics. Material and methods The paper takes the economic data performance for the Chilean economy from1990-2020, focusing in GDP growth, as well as the investment trend given the positive correlation between these variables. A theoretical background of the Solow Model is analyzed in more details, as well as its assumptions , especially those ones : a. Which assumes that production decisions are self-made by the operation efficiency requirement, b. Which make of the supply of labor high elasticity, linked to population growth , a key variable to ensure that given technological progress, output may growth as expected in the C-D production function. c. The role of technological progress in productivity growth given that in a less developed economy, productivity gains, would hardly come up without government support by setting rules and policies dealing with property rights, efficient regulation, tax incentives, and stable economic policies. Results a. The implication of lacking a management variable, meant that the economy would be on its own, far from being capable of coping with all the requirements to sustain economic growth path. b. The Solow Model standard formulation, had important limitations for a less developed economy c. Investment pattern follow a two tier format: „investment creation” and “investment deviation”. Conclusions The evaluation about the Chilean economy outcome up to 2019, was based on the advantages and disadvantages of the neo liberal model principles, without taking into consideration the ill designed microeconomic setting provided by the Solow model to sustain the path of key variables (Economic growth), as an input for public policies design and its right timing and consistency

The author of this article demonstrates how the unified approach to answering economic questions employed in modern quantitative macroeconomics research can be taught to undergraduate students using the Solow model. Through an application to post–WWII Japan, students get hands-on experience with (1) documenting empirical facts, (2) developing a model, (3) comparing the quantitative predictions of a model to the data, and (4) using a model as a laboratory to run counterfactual "experiments." This application thus offers instructors a low-cost way to "bridge the gap" between the content typically covered at the intermediate undergraduate level and the tools and methods commonly used by macroeconomists in their everyday research. [ABSTRACT FROM AUTHOR]

This study analyzes the relationship between the elasticity of substitution and the economic stability/instability. To this end, we adopt a CES production function that consistently involves all its variants and introduce two delays, called a gestation delay and a depreciation delay, into the Solow model. In the case of one delay, we find that the gestation delay is harmless, the depreciation delay has a destabilizing effect, and the two delays having the equal length possesses a stronger stabilizing effect than the destabilizing effect of the depreciation delay. In the case of two different delays, we analytically construct the stability switching curve that divides the parametric region into the stability and instability regions. We also demonstrate that the location of the stability switching curve depends not only on the elasticity of substitution but the baseline values of the CES function and the parametric values of the dynamic equation. [ABSTRACT FROM AUTHOR]

Purpose – This paper aims to apply regression-tree analysis to capture the nonlinear effects of corruption on economic growth. Using data of 103 countries for the period 1996–2017, the authors endogenously detect two distinct areas in corruption quality in which the members share the same model of economic growth. Design/methodology/approach – The authors apply regression tree analysis to capture the nonlinearity of the influences. This methodology allows us to split endogenously the whole sample of countries and characterize the different ways through which corruption impacts economic growth in each group of countries. Findings – The traditional determinants of economic growth have different impacts on countries depending on their level of corruption, which, in turn, confirms the parameter heterogeneity of the Solow model found in other strands of the literature. Originality/value – The authors apply a new approach to a worldwide sample obtaining novel results.

We show how diseases can affect economic growth in a Solow growth model, with population growth and no technical progress, but modified to include a saving rate that depends on the individual health status. We successively insert this model into the SIS (susceptible–infected–susceptible) and SIR (susceptible–infected–recovered) models of disease spreading. In these two models, the spread of the infection proceeds according to the so‐called basic reproductive number. This number determines in which of the two possible equilibria, the disease‐free or the pandemic equilibrium, the economy ends. We show that output per capita is always lower in the pandemic steady state, which implies a contraction in the economy's production possibilities frontier. [ABSTRACT FROM AUTHOR]

This study introduces Stackelberg-Nash equilibrium to neoclassical growth theory. It attempts to make neoclassical economic growth theory more robust in modelling the complexity of market structures. The model is constructed within the framework of the Solow-Uzawa two-sector model. The economy is composed of two sectors. The final goods sector is the same as in the Solow one-sector growth model which is characterized by perfect competition. The consumer goods sector is the same as the consumer goods sector in the Uzawa model but is characterized by Stackelberg duopoly. We model household behavior with Zhang’s concept of disposable income and utility. The model endogenously determines profits of duopoly which are equally distributed among the homogeneous population. We build the model and then identify the existence of an equilibrium point through simulation. We conduct comparative static analyses of some parameters. We also compare the economic performance of the traditional Uzawa model and the model with the Stackelberg-Nash equilibrium. We conclude that the imperfect competition increases national output, national wealth, and utility level in comparison to perfect competition.

It is a truism of neoclassical economics that a sufficiently high savings rate will be bad if it is dynamically inefficient. Here we consider a Solow model in which households follow a savings rate dictated by a social planner. Ideally, the social planner would instruct households to save at the Golden Rule savings rate that maximizes consumption per capita, but this advice needs to be adjusted when the social planner has imperfect control over how much households actually save. Analogous to what happens with precautionary saving at the household level, in this case, the social planner will maximize social welfare by targeting a savings rate higher than the Golden Rule. Precautionary social planning then yields a dynamically inefficient allocation, albeit with greater stability of consumption, which is often a stated priority of social planners. [ABSTRACT FROM AUTHOR]

In this study, we test for asymmetries in the tourism‐led growth hypothesis. Asymmetric causality tests allow us to examine whether positive or negative changes in tourism cause growth. Our specification is based on an extended Solow growth model and draws from recent articles on tourism and growth. Using Tonga as a case study over the period 1981–2018, we find that tourism asymmetrically Granger causes economic growth. The magnitude of effects from the nonlinear ARDL model shows that economic growth is more sensitive to a downward movement compared to an upward movement in visitor arrivals. [ABSTRACT FROM AUTHOR]

In the paper, the impact of physical capital investments on macroeconomic growth is examined. The authors try to show to what extent it depends on the supply bottleneck (disequilibrium), which existed before the investment and which is eliminated by this investment. The narrower the bottleneck and the more it slows down macroeconomic growth, the more output growth will result from this investment in physical capital. In order to verify this hypothesis, the growth model was modified. Because bottlenecks occur irregularly, GDP fluctuations generated by the model are also irregular (non-cyclical). The authors propose to estimate the macroeconomic bottleneck by the average lagged GDP growth (lags 2 to 6 years). The results of calculations made for Poland’s economy in the years 1997–2019 confirm that economic slowdown preceding investments strengthens their growth effect.

This work studies a parabolic-ODE PDE's system which describes the evolution of the physical capital " k " and technological progress " A ", using a meshless method in one and two dimensional bounded domain with regular boundary. The well-known Solow model is extended by considering the spatial diffusion of both capital and technology. Moreover, we study the case in which no spatial diffusion of the technology progress occurs. For such models, we propound schemes based on the Generalized Finite Difference method and prove the convergence of the numerical solution to the continuous one. Several examples show the dynamics of the model for a wide range of parameters. These examples illustrate the accuracy of the numerical method. [ABSTRACT FROM AUTHOR]

This study proposes a mathematical modeling approach for the physical capital diffusion through the borders of countries. Physical capital is considered a crucial variable for the economic growth of a nation. Here, we use an extension of the economic Solow model to describe how smuggling affects the economic growth of countries. In particular, we focus on the situation in Venezuela from 2012 to 2015. In this regard, we rely on a nonconcave production function instead of the classical Cobb–Douglas production function. Moreover, we investigate the effect of different physical capital fluxes on economic growth. The physical capital diffusion through the borders of a country is modeled based on a parabolic partial differential equation describing the dynamics of physical capital and boundary conditions of the Neumann type. Smuggling is present at numerous borders between countries and may include fuel, machinery, and food. This smuggling through the borders places challenges on a particular country's economy. The smuggling problem usually is related to a non-official exchange rate different from the official rate or subsidies. We study the effect of smuggling on the physical capital of a country using an extended Solow model. Numerical simulations are obtained using an explicit finite difference scheme describing how the physical capital diffusion through the border of a country affects its economic growth. The study of physical capital is a paramount aspect of the economic growth of several countries. The results show that when boundary conditions of Neumann type are different from zero, the dynamics of the physical capital differ from the classical economic behavior observed in the classical spatial Solow model without physical capital flux through the borders of countries. In particular, the numerical results show that the physical capital of a country decreases faster as the flux increases on the boundaries. Thus, we can conclude that avoiding smuggling through the frontiers is a crucial factor affecting economic growth. [ABSTRACT FROM AUTHOR]

This study aims to clarify the relationship between technological progress and economic growth in Vietnam. This investigation used annual data from the World Bank related to Vietnam from 1985 to 2019 and applied the approach of autoregressive distributed lag to evaluate the impact of technological progress on economic growth in Vietnam in the short and long term. The regression equation constructed in this investigation came from the analysis of the Cobb-Doulag equation and the Solow model. The results of the study showed that GDP per capita is affected by the variables of technological progress in the short and long term, which means that technological progress affects economic growth in Vietnam. This study also contributes to the area of economic growth research in Vietnam with important evidence-based results on the impact of technological progress on GDP per capita, and the findings of this study have several implications for the understanding of the role of technological progress in economic development. The current study is still limited to small sample sizes and does not cover all indicators for analysis; however, it provides the foundation for future investigations with larger sample sizes, and other elements of technological progress are modified and applied in specific fields. [ABSTRACT FROM AUTHOR]

Determination of the main indicators of economic growth is a key research question. In the course of solving this problem, many scientists agree that one of the drivers of economic development is interregional interaction. This article contains the results of a quantitative assessment of the role of interregional interaction for the Russian economy. The study is based on a modification of the Solow economic growth model which includes the level factor of interregional interaction. For a quantitative assessment of the effects of interregional interaction on economic development, a set of factors was determined that make it possible to assess the advantage that localization in a particular region can give to economic agents. The selected indicators have a direct impact on the potential and intensity of interregional interaction. The database for assessing the coefficients of the models and calculating the index of interregional interaction was formed on the basis of data from the website of the Federal State Statistics Service for the period from 2010 to 2018 for 83 regions of Russia. To select the best model of economic growth, considering interregional interaction, the authors evaluated different types of models: fixed effects model, time fixed effects model, random effects model, and time random effects model. The thesis about the importance of interregional interaction as one of the most important factors of production in modern Russia has found its empirical confirmation: the share of interregional interaction in ensuring the economic growth of Russian regions in the years 2015–2018 averaged 33%. The developed model of economic growth and the consideration of interregional interaction is universal and can be applied to various administrative-territorial units.

The purpose of this study is to study interdependence between growth and economic geography. We build a two-regional growth model of endogenous wealth under perfect and imperfect competition by integrating the three basic models – the Solow-Uzawa growth model, the Krugman two-region model, and the Dixit-Stiglitz imperfect competition model – in economic theory. The economy in our approach is composed of three sectors – the capital goods sector as in the Solow one sector, the consumer goods sector as in the Uzawa model, and the intermediates sector as in the Dixit-Stiglitz model. The economy is composed of two regions as in the Krugman two-region model with intermediates produced in the two regions under imperfect competition. The household behavior is modelling by synthesizing Zhang’s concept of disposable income and utility function and the Dixit-Stiglitz concept of composite good and utility function. We build and simulate the model. We identify existence of equilibrium. We examine effects of changes in some parameters on economic geography. We examined the effects of changes in some parameters on economic geography. For instance, we showed that as the transportation cost falls, the population is more concentrated on one region, the numbers of varieties of intermediates are reduced, the output level of each firm in the intermediate sector is increased, the household consumes more each intermediate good, and prices of all intermediate goods are reduced

This study constructs a growth model by integrating the three basic models in neoclassical growth theory with perfect competition and general equilibrium theory with monopolistic competition. The economy is composed of three sectors – the final good sector as in Solow’s one sector growth model, the middle goods sector for final good as Grossman and Helpman’s intermediates sector (which supplies intermediate inputs for the final good sector), and the middle goods sector for consumption as Dixit and Stiglitz’s intermediates sector (which supplies goods for consumption). Our model is different from the Solow model in that we model the household behavior with the utility function and disposable income proposed by Zhang. We deviate from the Dixit-Stiglitz model and the Grossman- Helpman model in that we distribute the profits of firms in monopolistic competition to households. We build and then simulate the model. We demonstrate the existence of a unique stable equilibrium point and plot the motion of the economy. We examine the effects of exogenous changes in some parameters. The comparative dynamic analysis analyzes the effects of the exogenous changes on transitory process and long-term equilibrium structure.

Externality exists in healthcare when an individual benefits from others being healthy as it reduces the probability of getting sick from illness. Healthy workers are considered to be the more productive labourers leading to a country’s positive economic growth over time. Several research studies have modelled disease transmission and its economic impact on a single country in isolation. We developed a two-country disease-economy model that explores disease transmission and cross-border infection of disease for its impacts. The model includes aspects of a worsening and rapid transmission of disease juxtaposed by positive impacts to the economy from tourism. We found that high friction affects the gross domestic product (GDP) of the lower-income country more than the higher-income country. Health aid from one country to another can substantially help grow the GDP of both countries due to the positive externality of disease reduction. Disease has less impact to both economies if the relative cost of treatment over an alternative (e.g. vaccination) is lower than the baseline value. Providing medical supplies to another country, adopting moderate friction between the countries, and finding treatments with lower costs result in the best scenario to preserve the GDP of both countries.

The purpose of this study is to contribute to economic growth theory by introducing Cournot competition into the Solow-Uzawa neoclassical growth model with Zhang’s concept of disposable income and utility function. The Solow-Uzawa two-sector growth model deals with economic growth with two sectors with all the markets perfectly competitive. The final goods sector in this study is the same as that in the Solow model with perfect competition. The consumer goods sector is composed of two firms and characterized by Cournot competition. All the input factors are traded in perfectly competitive markets. The duopoly’s product is solely consumed by consumers. Perfectly competitive firms earn zero profit, while duopolists earn positive profits. This study assumes that the population shares the profits equally. First, we built the dynamic model. Afterward, we found a computational procedure to describe the time-dependent path of the economy and conducted comparative dynamic analyses of some parameters. Finally, we compared the economic performances of the model with Cournot competition and the perfectly competitive model.

The purpose of this paper is to study economic growth with family-based microeconomic foundation. It develops a neoclassical growth model of endogenous wealth accumulation and consumption of two-person families. Growth mechanism and economic structures are based on a generalized Solowian growth model with Zhang’s concept of disposable income and utility. Each spouse maximizes his/her utility function which is dependent on his/her egocentric utility function and the spouse’s egocentric utility function. One’s egocentric utility function is related to one’s private consumption of goods, consumption of family goods, and saving made out of one’s own disposable income. The couple’s decisions are interdependent and are modelled as a Cournot-Nash game. Our model endogenously determines intra-household wealth accumulation and resource allocation on consumption and saving. The paper make an integration of some basic ideas in neoclassical growth theory and family economics. We conduct comparative dynamic analyses to show how the movement of the economy is affected by different exogenous changes in gender relations, preferences, and technologies.

Abstract. Ukraine’s desire to integrate into the international economic space poses significant obstacles to innovative enterprises due to the destabilizing impact of globalization. Among the most important are financial, economic and political instability, risks of insolvency and reduced financial stability, which leads to the inability to meet external and internal challenges and ensure the optimal level of economic security. Under such conditions, the need to effectively counteract the destabilizing factors and ensure high rates of efficiency and profitability, which can be achieved through innovation and improvement of financial relations. Innovative activity, despite its high cost and significant level of risk, is one of the priorities of the enterprise. The activities of innovative enterprises attract the attention of economic agents, so ensuring the proper level of their economic security is no less important. Given that there is still no single unified and legally established method of calculating the level of economic security of enterprises, it is important to find the most acceptable and rational methods of calculating the level of security of enterprises, as well as developing a legal mechanism for their consolidation, which is the focus of scientists and practitioners for a long time. However, the problem has not yet been resolved. The article examines the main approaches to assessing the level of economic security of innovative enterprises and identifies the importance of the factor of innovation and legal regulation of financial relations with other economic agents. The main indicators of economic security of the enterprise are systematized and their classification into macroeconomic, financial, foreign economic, investment, scientific and technological, as well as production is performed. The method of assessment the level of economic security of an innovative enterprise using the Solow model is substantiated and proposed. Keywords: innovations, Solow model, indicators of economic security of the enterprise, integrated indicator of the level of economic security of the enterprise. JEL Classification С13, С51, О47, О33 Formulas: 39; fig.: 1; tabl.: 0; bibl.: 11.

Copyright of Online Journal Mundo Asia Pacífico is the property of Universidad EAFIT and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We use regional data across 27 European countries and look into the effect of tourist arrivals on regional growth during 2000–2017. The research is set in an augmented Solow model estimated via a rich and flexible empirical strategy, with different underlying assumptions about the impacts of the regressors and unobservables. A first demarcation line across our set of estimators is between the 'pooled' estimators (assuming common parameters across regions) and the 'heterogeneous' ones (allowing for region-specific parameters). An additional axis of differentiation lies in the way the impact of unobservables is accounted for via the estimation method: some methodologies hypothesize a common impact of the latter across space, while others make room for a possible differentiated effect over the regions. Among the pooled estimators, our preferred one reveals a positive and significant contribution of tourism to regional growth. Among the heterogeneous estimators, our favored one corroborates the previous result and uncovers vast regional disparities in terms of the effect of tourist arrivals on growth. A preliminary investigation suggests that regions endowed with a large share of highly educated population experienced the greatest growth-impact of tourist arrivals. [ABSTRACT FROM AUTHOR]

This study proposes a mathematical modeling approach for the physical capital diffusion through the borders of countries. Physical capital is considered a crucial variable for the economic growth of a nation. Here, we use an extension of the economic Solow model to describe how smuggling affects the economic growth of countries. In particular, we focus on the situation in Venezuela from 2012 to 2015. In this regard, we rely on a nonconcave production function instead of the classical Cobb–Douglas production function. Moreover, we investigate the effect of different physical capital fluxes on economic growth. The physical capital diffusion through the borders of a country is modeled based on a parabolic partial differential equation describing the dynamics of physical capital and boundary conditions of the Neumann type. Smuggling is present at numerous borders between countries and may include fuel, machinery, and food. This smuggling through the borders places challenges on a particular country’s economy. The smuggling problem usually is related to a non-official exchange rate different from the official rate or subsidies. We study the effect of smuggling on the physical capital of a country using an extended Solow model. Numerical simulations are obtained using an explicit finite difference scheme describing how the physical capital diffusion through the border of a country affects its economic growth. The study of physical capital is a paramount aspect of the economic growth of several countries. The results show that when boundary conditions of Neumann type are different from zero, the dynamics of the physical capital differ from the classical economic behavior observed in the classical spatial Solow model without physical capital flux through the borders of countries. In particular, the numerical results show that the physical capital of a country decreases faster as the flux increases on the boundaries. Thus, we can conclude that avoiding smuggling through the frontiers is a crucial factor affecting economic growth.

In their famous article, Mankiw, Romer and Weil (1992) concluded that estimates based on the augmented Solow model imply output elasticities of physical and human capital at about 0.3. When replicating the authors’ methodological approach to our own data, there is a significant overestimation of the impact of physical capital in recent periods compared to the conclusions of Mankiw, Romer and Weil (1992). We consider the main determinant of this overestimation to be an imperfectly chosen proxy variable, which does not capture well the stock of human capital essential for the current economic growth. In this paper, we tested four different proxy variables for human capital in the augmented Solow model. We found that the proportion of people with at least some tertiary education is the best variable in analyzing data between 1960 – 2000. When examining recent periods, the better proxy variable is the average length of schooling. [ABSTRACT FROM AUTHOR]

As technology revolutionizes the methods of both production and communication, economists have to respond to new market structures and efficiencies, and the controversial concept of decentralization emerging in recent decades should also be examined in terms of its capacity to induce structural changes in the economy. This paper takes look at one specific market of interest and models the decentralization of a hypothetical emission quota market with the inclusion of households though automated auctions, in order to provide a preliminary analysis of how the redistribution of emission quotas would impact short-run equilibrium in this market and long-run growths. Given the endogenous dynamics, we would also examine the effects of exogenous technological shocks. For the purpose and scope of this paper, a simple mathematical formulation based on the Solow growth model as well as certain strong assumptions derived from economic intuitions is established, aiming to provide a more quantitative illustration of the effects from decentralization on such a system.

This paper is devoted to a numerical study of defining of parameters of dynamical systems arising in financial and economic problems. The importance of parameters that are difficult to measure is great, so defining them will help to make forecasts and a work plan for the future at the governmental level. An effective way to restore parameters is to solve the inverse problem. The method of coefficient recovery using the algorithm of differential evolution, which was proposed by Rainer Storn and Kenneth Price, is presented in this paper. On the example of solving the direct problem of the mathematical model of neoclassical economic growth of Robert Solow and the results obtained, the inverse problem was solved and unknown parameters were determined. The Solow model is based on the Cobb-Douglas production function, taking into account labor, capital and exogenous neutral technical progress. Also, for further calculations, the economic model proposed by Mankiw-Romer-Weil based on the Solow model was considered, but with the addition of human capital, where the number of variables and coefficients that need to be restored has already increasing. A direct problem was also solved, results were obtained that were applied in the algorithm of differential evolution for parameters recovery.

. Determination of the main indicators of economic growth is a key research question. In the course of solving this problem, many scientists agree that one of the drivers of economic development is interregional interaction. This article contains the results of a quantitative assessment of the role of interregional interaction for the Russian economy. The study is based on a modification of the Solow economic growth model which includes the level factor of interregional interaction. For a quantitative assessment of the effects of interregional interaction on economic development, a set of factors was determined that make it possible to assess the advantage that localization in a particular region can give to economic agents. The selected indicators have a direct impact on the potential and intensity of interregional interaction. The database for assessing the coefficients of the models and calculating the index of interregional interaction was formed on the basis of data from the website of the Federal State Statistics Service for the period from 2010 to 2018 for 83 regions of Russia. To select the best model of economic growth, considering interregional interaction, the authors evaluated different types of models: fixed effects model, time fixed effects model, random effects model, and time random effects model. The thesis about the importance of interregional interaction as one of the most important factors of production in modern Russia has found its empirical confirmation: the share of interregional interaction in ensuring the economic growth of Russian regions in the years 2015–2018 averaged 33%. The developed model of economic growth and the consideration of interregional interaction is universal and can be applied to various administrative-territorial units. [ABSTRACT FROM AUTHOR]

The differential evolution algorithm is applied to solve the optimization problem to reconstruct the production function (inverse problem) for the spatial Solow mathematical model using additional measurements of the gross domestic product for the fixed points. Since the inverse problem is ill-posed the regularized differential evolution is applied. For getting the optimized solution of the inverse problem the differential evolution algorithm is paralleled to 32 kernels. Numerical results for different technological levels and errors in measured data are presented and discussed. [ABSTRACT FROM AUTHOR]

This study investigated the contributions of human capital and physical capital to economies at different stages by measuring the economic development with the traditional GDP and green GDP. The traditional GDP stood for the quantity of economic growth, and the green GDP, taking both the energy consumption and environmental pollution into account, was employed to represent the sustainability of economic development. We used a panel data of 143 countries and regions during the period from 1990 to 2014, and results showed that the elasticities of output with respect to human capital were greater compared to physical capital, while green GDP was significantly more sensitive to changes in human capital than the traditional GDP. In particular, considering the unbalanced distribution of economic growth among countries and regions, we employed the quantile regression model to explore the heterogeneous roles of physical and human capital in different stages of economic development, which evidenced not only the significance but also the stability of human capital. As national economic levels grew, countries became less dependent on physical capital, yet human capital maintained its outstanding role at different stages of economic development, particularly for the building of more sustainable economies.