Authors: Juan Gabriel Brida; Gastón Cayssials
Addresses: Departamento de Métodos Cuantitativos, Facultad de Ciencias Económicas y de Administración, Universidad de la República, Uruguay ' Departamento de Métodos Cuantitativos, Facultad de Ciencias Económicas y de Administración, Universidad de la República, Uruguay
Abstract: This paper studies an extension of the Mankiw-Romer-Weil growth model by departing from the standard assumption of constant population growth rate. More concretely, this rate is assumed to be decreasing over time and a general population growth law verifying this characteristic is introduced. In this setup, the model can be represented by a three dimensional dynamical system which admits a unique solution for any initial condition. It is shown that there is a unique non-trivial equilibrium which is a global attractor. In addition, the speed of convergence to the steady state is characterised, showing that this velocity is lower than in the original Mankiw-Romer-Weil model. This implies that, the modified model offers a more realistic framework for empirical studies on economic growth and its determinants. Future research includes the calibration of the model with empirical data to compare with the results of the original model.
Keywords: Mankiw-Romer-Weil model; economic growth model; decreasing population; convergence speed; population growth rate.
International Journal of Mathematical Modelling and Numerical Optimisation, 2016 Vol.7 No.3/4, pp.363 - 375
Received: 26 Aug 2016
Accepted: 11 Nov 2016
Published online: 27 Jan 2017 *