An Integration of Walrasian General Equilibrium, Ricardian Distribution, and Neoclassical Growth Theories

2020 ◽  
pp. 41-68
Author(s):  
Wei-Bin Zhang
Keyword(s):  
General Equilibrium ◽  
Neoclassical Growth

scholarly journals Economic Growth and Inequality with Tourism in an Integrated Walrasian-General Equilibrium and Neoclassical-Growth Theory

2018 ◽  
Vol 21 (1) ◽  
pp. 17-36
Author(s):  
Wei-Bin Zhang
Keyword(s):  
Economic Growth ◽  
General Equilibrium ◽  
Open Economy ◽  
Nonlinear Differential Equations ◽  
Small Open Economy ◽  
Growth Theory ◽  
Traded Goods ◽  
The Rich ◽  
Neoclassical Growth Theory ◽  
Neoclassical Growth

Abstract This paper studies dynamic interdependence between economic growth, tourism, and inequalities in income and wealth in a small open economy. We build the dynamic model in an integrated Walrasian-general equilibrium and neoclassical-growth theory for a small open economy with multiple sectors and heterogeneous households in a perfectly competitive economy. The economy consists of one service sector which supplies non-traded services and one industrial sector which produces traded goods. We treat wealth accumulation and land distribution between housing and supply of services as endogenous variables. We show that the motion of the economy with J types of households is given by J nonlinear differential equations. We simulate the motion of the system with three groups of households. We also conduct comparative dynamic analysis with regards to the rate of interest, the price elasticity of tourism, the global economic condition, and the rich class’ human capital, and the rich class’ propensity to consume housing.

scholarly journals Land Value and Rent Dynamics in an Integrated Walrasian General Equilibrium and Neoclassical Growth Theory

2014 ◽  
Vol 61 (2) ◽  
pp. 235-258
Author(s):  
Wei-Bin Zhang
Keyword(s):  
Human Capital ◽  
General Equilibrium ◽  
Dynamic Analysis ◽  
Growth Model ◽  
Growth Theory ◽  
Land Value ◽  
The Rich ◽  
Neoclassical Growth Theory ◽  
Neoclassical Growth

Abstract This paper is concerned with relationship between growth and land value change. It builds a heterogeneous-households growth model with endogenous wealth accumulation and fixed nondepreciating asset (land) in an integrated Walrasian general equilibrium and neoclassical growth theory. The production side consists of one service sector and one industrial sector. We use an alternative utility function proposed by Zhang, which enable us to develop a dynamic growth model with genuine heterogeneity. The wealth and income inequality is due to household heterogeneity in preferences and human capital as well as the households’ initial wealth. This is different from the standard Ramsey-type heterogeneous-households growth models, for instance, by Turnovsky and Garcia-Penalosa (2008), where agents are heterogeneous only in their initial capital endowment, not in preference or/and human capital. We build a model for any number of types of household and provide a computational procedure for simulating model. For illustration we simulate the model for the economy with three types of households. We simulate the motion of the national economy and carry out comparative dynamic analysis. The comparative dynamic analysis provides some important insights. For instance, as the rich group increases its propensity to save, the GDP and land value are increased. In the long term the group accumulates more wealth, consumes more goods and services and accumulates more wealth. But in the long term the other two groups suffer from the rich households’ preference change as their lot sizes, consumption levels of services and goods, and wealth are all reduced.

scholarly journals The Neoclassical Growth Model and the Labor Share Decline

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Zachary L. Mahone ◽  
Joaquín Naval ◽  
Pau S. Pujolas
Keyword(s):  
General Equilibrium ◽  
Production Function ◽  
Growth Models ◽  
Model Performance ◽  
Labor Share ◽  
Neoclassical Growth Model ◽  
Time Periods ◽  
Investment Response ◽  
Neoclassical Growth ◽  
Quantitative Importance

Abstract The labor share may be declining in the data, but it is often assumed constant in neoclassical growth models (NGM). We assess the quantitative importance of this discrepancy by comparing alternative calibration approaches featuring constant and declining labor shares. We find little difference in model performance. Our results derive from strong general equilibrium effects: while a declining labor share mechanically lowers wage growth, the investment response pushes wages back up. Hence, different models deliver nearly identical paths of macro aggregates. Numerous robustness checks (including a CES production function, different time periods, and calculations of the labor share) reinforce the similarity of performance across model specifications. We conclude that the NGM with a constant labor share is still an appropriate choice to study many standard macro aggregates.

Sign in / Sign up

Export Citation Format

Share Document