Economic Growth: A Unified Approach | by Olivier de La Grandville | 2009 | ISBN: 9780521898010. Economics Books. Positive Growth Theory. Optimal Growth Theory. Model of Economic Growth

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Economic Growth: A Unified Approach

by Olivier de La Grandville
2009 (376 pages)
ISBN:9780521898010

Providing a fascinating introduction to the theory of economic growth, this user-friendly book shows us that by unifying the descriptive and normative aspects of growth theory we can generate many fresh insights.

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Economic Growth—A Unified Approach

Introduction
Part I – Positive Growth Theory
Chapter 1 – The Welfare of Society and Economic Growth
Overview
1: Income as a Measure of Economic Activity
2: Is Income Per Person a Fair Gauge of Society’s Welfare?
3: A Major Caveat
Appendix: A brief review of some useful concepts in economics
Exercises

Chapter 2 – The Growth Process

1: The Growth Process: An Intuitive Approach
2: A More Precise Approach: A Simple Model of Economic Growth
3: Introducing Technical Progress
Appendix 1: The Concept of Elasticity, Its Use in Economics, and Its Applications to Growth Rates
Appendix 2: Solution of the first-order differential equation
Exercises

Chapter 3 – A Production Function of Central Importance
1: Motivation
2: The Links Between the Elasticity of Substitution and Income Distribution
3: Determining the Constant Elasticity of Substitution Production Function
Exercises

Chapter 4 – The CES Production Function as a General Mean
Overview
1: The Concept of the General Mean of Order p, and its Fundamental Properties
2: Applications to the CES Production Function
3: The Qualitative Behaviour of the CES Function as s Changes
Appendix: On General Means: An Alternative Proof of a Famous Theorem and a Conjecture

Chapter 5 – Capital–Labour Substitution and Economic Growth
Overview
1: Further Analytics of the CES Function in a Growth Model
2: The Elasticity of Substitution at Work
3: Introducing Technical Progress
4: Time-Series and Cross-Section Estimates
5: The Broader Significance of the Elasticity of Substitution in the Context of Economic Growth
Appendix: Derivation of the Cost Function with Capital and Labour-Augmenting Progress

Chapter 6 – The Long-Term Growth Rate as a Random Variable, with an Application to the US Economy
Overview
1: From Daily to Yearly Growth Rates
2: The First Moments of the Long-Term Yearly Growth Rate
3: Application to the Long-Term Growth Rates of the US Economy
Appendix: A Reminder on Moment Generating Functions
Exercises

Part II – Optimal Growth Theory
Chapter 7 – Optimal Growth Theory—An Introduction to the Calculus of Variations
Overview
1: The Euler Equation
2: Fundamental Properties of the Euler Equation
3: An Important Particular Case
4: A Necessary and Sufficient Condition for y(x) to Maximize the Functional
Appendix 1: Differentiating an Integral with Respect to a Parameter – the Leibniz Formula; a Geometrical Interpretation
Appendix 2: Solution of the Brachistochrone Problem
Appendix 3: Necessary and Sufficient Conditions for the Integrand of the Functional to be Concave in y, y’
Exercises

Chapter 8 – Other Major Tools for Optimal Growth Theory—The Pontryagin Maximum Principle and the Dorfmanian
Overview
1: The Maximum Principle in its Simplest Form
2: The Relationship Between the Pontryagin Maximum Principle and the Calculus of Variations
3: An Economic Derivation of the Maximum Principle
4: First Application: Deriving the Euler Equation from Economic Reasoning
5: Further Applications: Deriving High-Order Equations of the Calculus of Variations

Chapter 9 – First Applications to Optimal Growth
Overview
1: The Mainstream Problem of Optimal Growth: a Simplified Presentation
2: The Calculus of Variations Approach
3: The Pontryagin Maximum Principle Approach
4: Optimal Paths
Exercises

Chapter 10 – Optimal Growth and the Optimal Savings Rate
Overview
1: The Central Model of Optimal Growth Theory
2: The Consequences of Using Power Utility Functions
3: The Consequences of Using Exponential Utility Functions
Exercises

Part III – A Unified Approach
Chapter 11 – Preliminaries—Interest Rates and Capital Valuation
Overview
1: The Reason for the Existence of Interest Rates
2: The Various Types of Interest Rates and Their Fundamental Properties
3: Applications to the Model of Economic Growth
Exercises

Chapter 12 – From Arbitrage to Equilibrium
1: The Case of Risk-Free Transactions
2: Introducing Uncertainty and a Risk Premium

Chapter 13 – Optimal Savings—A General Approach
Overview
1: Competitive Equilibrium and its Resulting Savings Rate
2: The Optimal Savings Rate: Derivation from Optimal Growth
3: A Geometric Construction of the Optimal Savings Rate
4: Values of the Optimal Savings Rate and its Sensitivity to Parameter Changes
5: Estimating the Risk Premium of the Economy
6: Growth in Disequilibrium
7: Consequences for Our Future
8: Conclusion
Exercises

Chapter 14 – Problems in Growth—Common Traits between Planned Economies and Poor Countries
Overview
1: The Consequences of Planning
2: Common Traits of Centrally Planned Economies and Poor Countries
Exercises

Chapter 15 – From Ibn Khaldun to Adam Smith, and a Proof of Smith’s Conjecture
Overview
1: Ibn Khaldun’s Message
2: Two Illustrations of the Message of Ibn Khaldun and Adam Smith
3: A Proof of Smith’s Conjecture

In Conclusion—On the Convergence of Ideas and Values Through Civilizations
Further Reading, Data on Growth and References
Overview
Other References, Quoted in this Book

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