Hostname: page-component-78c5997874-mlc7c Total loading time: 0 Render date: 2024-11-06T13:13:43.368Z Has data issue: false hasContentIssue false
  • English
  • Français

A NOTE ON ECONOMIC GROWTH WITH SUBSISTENCE CONSUMPTION

Published online by Cambridge University Press:  26 October 2010

Holger Strulik
Holger Strulik*
Affiliation:
University of Hannover
*
Address correspondence to: Holger Strulik, Department of Economics, University of Hannover, Koenigsworther Platz 1, 30167 Hannover, Germany; e-mail: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

It is well known that the performance of simple models of economic growth improves substantially through the introduction of subsistence consumption. How to compute subsistence needs, however, is a difficult and controversial issue. Here, I reconsider the linear (Ak) growth model with subsistence consumption and show that the evolution of savings rates and economic growth rates over time is independent of the size of subsistence needs. The model is thus more general and less subject to arbitrariness than might have been thought initially. Quantitatively, it is shown that, although there is no degree of freedom to manipulate transitional dynamics, the model approximates the historical evolution of savings rates and growth rates reasonably well.

Keywords

Economic GrowthSavingSubsistence Needs
Type
Notes
Information
Macroeconomic Dynamics , Volume 14 , Issue 5 , November 2010 , pp. 763 - 771
Copyright
Copyright © Cambridge University Press 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Barro, Robert J. and Sala-i-Martin, Xavier (2003) Economic Growth, 2nd ed. Cambridge, MA: MIT Press.Google Scholar
Carroll, Christoper D., Overland, Jody, and Weil, David N. (2000) Saving and growth with habit formation. American Economic Review 90, 341–355.CrossRefGoogle Scholar
Dalgaard, Carl-Johan and Strulik, Holger (2010) The Physiological Foundations of the Wealth of Nations. University of Copenhagen DP 10-05.CrossRefGoogle Scholar
Deane, Phyllis and Cole, W.A. (1969) British Economic Growth 1688–1959. Cambridge, UK: Cambridge University Press.Google Scholar
Dynan, Karen E., Skinner, Jonathan, and Zeldes, Stephan P. (2004) Do the rich save more? Journal of Political Economy 112, 397–444.CrossRefGoogle Scholar
Feinstein, Charles H. (1981) Capital accumulation and the Industrial Revolution. In Floud, Roderick and McCloskey, Deirdre N. (eds.), The Economic History of Britain since 1700, Vol. 1: 1700–1860. Cambridge, UK: Cambridge University Press.Google Scholar
Galor, Oded (2005) From stagnation to growth: Unified growth theory. In Aghion, Phillipe and Durlauf, Steven N., Handbook of Economic Growth, Vol. 1A. Amsterdam: North-Holland.Google Scholar
Jones, Charles I. and Williams, John C. (2000) Too much of a good thing? The economics of investment in R&D. Journal of Economic Growth 5, 65–85.CrossRefGoogle Scholar
Kraay, Aart and Raddatz, Claudio (2007) Poverty traps, aid, and growth. Journal of Development Economics 82, 315–347.CrossRefGoogle Scholar
Loayza, Norman, KlausSchmidt-Hebbel, K. Schmidt-Hebbel, K., and Serven, Luis (2000) What drives private saving across the world? Review of Economics and Statistics 82, 165–181.CrossRefGoogle Scholar
Maddison, Angus (2001) The World Economy—A Millennial Perspective. Paris: Development Center, OECD.CrossRefGoogle Scholar
Sharif, Mohammed (1986) The concept and measurement of subsistence: A survey of the literature. World Development 14, 555–577.CrossRefGoogle Scholar
Steger, Thomas M. (2000) Economic growth with subsistence consumption. Journal of Development Economics 62, 343–361.CrossRefGoogle Scholar
West, Geoffrey B. and Brown, James H. (2005) The origin of allometric scaling laws in biology from genomes to ecosystems: Towards a quantitative unifying theory of biological structure and organization. Journal of Experimental Biology 208, 1575–1592.CrossRefGoogle Scholar