Business Cycles in a Three-sector Growth Model with Portfolio Equilibrium between Land, Gold and Capital

2018 ◽  
Vol 12 (2) ◽  
pp. 171-196
Author(s):  
Wei-Bin Zhang
Keyword(s):  
Business Cycles ◽  
Environmental Change ◽  
Growth Model ◽  
Capital Accumulation ◽  
Jel Classification ◽  
Time Dependent ◽  
Tax Rate ◽  
Exogenous Shocks ◽  
Dependent Variables ◽  
Economic Foundation

This study generalises a growth model proposed by Zhang (2016) through allowing all the time-dependent variables to be time-dependent. Zhang’s model deals with dynamic interdependence between capital accumulation and environmental change, with portfolio equilibrium among land, gold and physical wealth in a multi-sector general equilibrium framework. The model explains the dynamics of prices, rents and distribution of land, gold, physical wealth and environmental change on the basis of micro-economic foundation. This article generalises the model to explain business cycles due to different exogenous shocks. We simulate the motion of the economy and conduct comparative dynamic analysis to demonstrate business cycles due to periodic oscillations in the propensity to use gold, the propensity to consume housing, the propensity to consume industrial goods, the propensity to consume agricultural goods, the propensity to save, and the tax rate on the consumption of industrial goods. JEL Classification: O41, D41, E32

scholarly journals GLOBAL DEVELOPMENT, TRADE, HUMAN CAPITAL, AND BUSINESS CYCLES

2020 ◽  
Vol 5 (Special) ◽  
pp. 9-29
Author(s):  
Wei-Bin Zhang
Keyword(s):  
Human Capital ◽  
Growth Model ◽  
Capital Accumulation ◽  
Equilibrium Points ◽  
Human Capital Accumulation ◽  
Learning Abilities ◽  
Exogenous Shocks ◽  
Trade Model ◽  
Comprehensive Framework ◽  
National Economies

This paper generalizes the multi-country growth model with capital accumulation, human capital accumulation, economic structure and international trade by Zhang (2014) by making all the time-independent parameters in Zhang’s model as time-dependent parameters. Each national economy consists of one tradable, one non-tradable and one education sector. National economies are different in propensities to save, to obtain education and to consume, and in learning abilities. The model integrates the Solow growth model, the Uzawa two-sector growth model, the Uzawa-Lucas two-sector growth model, and the Oniki–Uzawa trade model within a comprehensive framework. Human capital accumulation is through education in the Uzawa-Lucas model, Arrow’s learning by producing, and Zhang’s learning by consuming (creative learning). The behavior of the household is described with an alternative approach to household behavior. We simulated the model to demonstrate existence of equilibrium points, motion of the dynamic system, and oscillations due to different exogenous shocks.

Service Good as an Intermediate Input and Optimal Government Policy in an Endogenous Growth Model

2019 ◽  
Vol 8 (1) ◽  
pp. 57-91
Author(s):  
Senjuti Gupta ◽  
Bidisha Chakraborty ◽  
Tanmoyee Banerjee (Chatterjee)
Keyword(s):  
Growth Rate ◽  
Human Capital ◽  
Endogenous Growth ◽  
Growth Model ◽  
Capital Accumulation ◽  
Stable Steady State ◽  
Command Economy ◽  
Tax Rate ◽  
Endogenous Growth Model ◽  
Competitive Economy

The present article considers an endogenous growth model in which the service output is used as intermediate good in commodity sector, tax is imposed on manufacturing product and the revenue earned is invested to create human capital. It is shown that there exists a unique, saddle path stable steady-state growth rate of human capital accumulation and a unique growth-maximizing tax rate. The optimal tax rate for the command economy is compared with growth-maximizing tax rate in competitive economy. A numerical analysis shows that the command economy will have a higher growth rate than the competitive economy. An extension of the model where households privately spend for accumulation of human capital yields the same growth rate as that of the command economy of the previous model. JEL Classification: E6, H2, O4

scholarly journals A Discrete Heterogeneous-Group Economic Growth Model with Endogenous Leisure Time

2009 ◽  
Vol 2009 ◽  
pp. 1-17
Author(s):  
Wei-Bin Zhang
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Income Distribution ◽  
Growth Model ◽  
Time Allocation ◽  
Capital Accumulation ◽  
Economic Growth Model ◽  
National Economic ◽  
The Rich ◽  
Main Engine

This paper proposes a one-sector multigroup growth model with endogenous labor supply in discrete time. Proposing an alternative approach to behavior of households, we examine the dynamics of wealth and income distribution in a competitive economy with capital accumulation as the main engine of economic growth. We show how human capital levels, preferences, and labor force of heterogeneous households determine the national economic growth, wealth, and income distribution and time allocation of the groups. By simulation we demonstrate, for instance, that in the three-group economy when the rich group's human capital is improved, all the groups will economically benefit, and the leisure times of all the groups are reduced but when any other group's human capital is improved, the group will economically benefit, the other two groups economically lose, and the leisure times of all the groups are increased.

Human capital accumulation, income distribution, and economic growth: a demand-led analytical framework

2021 ◽  
Vol 9 (3) ◽  
pp. 319-336
Author(s):  
Gilberto Tadeu Lima ◽  
Laura Carvalho ◽  
Gustavo Pereira Serra
Keyword(s):  
Human Capital ◽  
Capital Accumulation ◽  
Analytical Framework ◽  
Output Growth ◽  
Human Capital Accumulation ◽  
Capital Utilization ◽  
Tax Rate ◽  
Long Run ◽  
The Impact ◽  
Long Run Equilibrium

This paper incorporates human capital accumulation through provision of universal public education by a balanced-budget government to a demand-driven analytical framework of functional distribution and growth of income. Human capital accumulation positively impacts on workers’ productivity in production and their bargaining power in wage negotiations. In the long-run equilibrium, a rise in the tax rate (which also denotes the share of output spent in human capital formation) lowers the pre- and after-tax wage share and physical capital utilization, and thus raises (lowers) the output growth rate when the latter is profit-led (wage-led). The impact of a higher tax rate on the employment rate (which also measures human capital utilization) in the long-run equilibrium is negative (ambiguous) when output growth is wage-led (profit-led). In any case, the supply of higher-skilled workers does not automatically create its own demand.

Business Cycles Analysis in Cameroon an overview

2021 ◽  
pp. 1
Author(s):  
Alassa Mfouapon ◽  
◽  
Fabien Sundjo ◽  
Keyword(s):  
Business Cycles ◽  
Regime Switching ◽  
Financial Time Series ◽  
Three Dimensions ◽  
Macroeconomic Fluctuations ◽  
Empirical Literature ◽  
Output Volatility ◽  
Macroeconomic Dynamics ◽  
Exogenous Shocks ◽  
Cross Correlations

This paper aims at conducting a thorough analysis of business cycles in Cameroon by statistically assessing their main characteristics. The analysis is carried out by considering the three dimensions of macroeconomic fluctuations. By assessing output volatility, light on the sensitivity of the economy to exogenous shocks as well as to endogenous sources of instability is shed. Likewise, analysing the co-movements of aggregate variables of interest helps in understanding the extent to which the observed fluctuations relate to other aggregates in the economy and hence, the main forces driving the dynamics of this economy. Eventually, more light could be shed on macroeconomic dynamics by analysing the timing and persistence of business cycles. Overall, such analysis is conducted using basic statistical tools commonly used in the empirical literature on business cycles. These are the standard deviation as a measure of volatility, cross-correlations as a means of analysing co-movements and auto-correlations as measures of persistence. The main limitation in this study is the linear consideration of observed data. In fact, many macroeconomic and financial time-series that are used in quantitative macroeconomic models are subject to a number of regime-switching in reality. This fact needs to be taken into account in the subsequent research

Does board independence constrain insider opportunism?

2020 ◽  
pp. 031289622094638
Author(s):  
Dewan Rahman ◽  
Robert Faff ◽  
Barry Oliver
Keyword(s):  
Research And Development ◽  
Insider Trading ◽  
Jel Classification ◽  
Independent Directors ◽  
Board Independence ◽  
Exogenous Shocks ◽  
Sarbanes Oxley ◽  
Trading Restrictions ◽  
The Impact ◽  
Identification Strategy

We examine whether insider opportunism is reduced by board independence. Using a sample of 18,194 firm-year observations over the period 1996–2016, we show that board independence constrains opportunistic insider trading. Our identification strategy uses the Sarbanes–Oxley Act of 2002 (SOX Act) and associated changes to the listing rules of NYSE/NASDAQ as a source of exogenous shocks in board independence. Our results are economically significant as insider opportunism declines by about 10.5%. We find that insider trading restrictions is the channel through which board independence reduces insider opportunism. Our additional analyses show that in competitive and R&D (research and development) intensive firms, the impact of board independence on opportunism is less pronounced. We also find that board independence constrains opportunism only in less complex firms. However, in co-opted boards, independent directors are less effective. Overall, we support the monitoring channel of board independence for reducing insider opportunism. JEL Classification: G14, G34, G40

scholarly journals Education, Income, Wealth Inequality and Business Cycles in a General Equilibrium Growth Model

2020 ◽  
Vol 26 (4) ◽  
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Business Cycles ◽  
General Equilibrium ◽  
Growth Model ◽  
Open Economy ◽  
Wealth Inequality ◽  
Learning By Doing ◽  
Government Subsidy ◽  
Wealth Inequalities

The paper is concerned with the dynamic interactions between physical capital, human capital, income and wealth inequalities between different households with government subsidy to education. It generalizes the endogenous growth model of a small-open economy proposed by Zhang (2016). Zhang’s paper deals with income and wealth inequalities between heterogeneous households with government subsidy to education. The paper makes a contribution to the literature of economic growth with endogenous education by integrating Solow-Uzawa’s neoclassical growth theory, Uzawa-Lucas model, Arrow’s learning by doing, Zhang’s creative leisure, and Walrasian general equilibrium theory. The model treats endogenous capital and human capital accumulation as the main engines of economic growth. This study generalizes Zhang’s model by allowing constant coefficients to be time-dependent. We simulate the generalized model to demonstrate existence of business cycles due to various exogenous periodic shocks.

scholarly journals The Dynamics of a Spatial Economic Model with Bounded Population Growth

2021 ◽  
Vol 2021 ◽  
pp. 1-11
Author(s):  
Yue Zhong
Keyword(s):  
Economic Growth ◽  
Population Growth ◽  
Growth Model ◽  
Explicit Solution ◽  
Capital Accumulation ◽  
Initial Distribution ◽  
Time Behavior ◽  
Continuous Space ◽  
Infinite Dimensional ◽  
Economic Growth Model

We investigate a spatial economic growth model with bounded population growth to obtain the asymptotic behavior of detrended capital in a continuous space. The formation of capital accumulation is expressed by a partial differential equation with corresponding boundary conditions. The capital accumulation interacts with the morphology to affect the optimal dynamics of economic growth. After redrafting the spatial growth model in the infinite dimensional Hilbert space, we identify the unique optimal control and value function when the bounded population growth is considered. With nonnegative initial distribution of capital, the explicit solution of the model is obtained. The time behavior of the explicit solution guarantees the convergence issue of the detrended capital level across space and time.

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