Search results

This chapter is a radical critique of the neoclassical growth theory, justifying ways out of mainstream economics. It has three parts. The first one analyzes growth theories from the Classical representation to the endogenous growth models. The second part demonstrates that the “new growth theory” is not a break with Solow's formalization. To prove it, we build an original Solowian endogenous growth model. Then, this neoclassical macrodynamic framework is technically, deeply critized in a third part. We show that both exogenous and endogenous neoclassical models prove to be incapable to explain growth in the long period. We concentrate on the ambiguities surrounding the hypothesis of single agent, as well as on the role of the state, in particular when it is considered as a “planner” by the neoclassicals. Endogenous growth models do not correspond to macrodynamization of the Walrasian general equilibrium, nor have solid microeconomic bases. We advocate in favor of rehabilitating state's intervention in social areas and of reactivating Marxist theoretical reflections regarding social planning and class analysis in the current time of structural crisis of the capitalist world system.

The purpose of this paper is to develop growth models that depart from the conventional framework, in the sense that consumption decisions take into account previous periods' expectations about output fluctuations. Households will raise their propensity to consume in periods of expected expansion and they will lower it in phases of predictable recession. Such a framework allows discussion of how growth trends may be disturbed over time as the result of changes in consumer sentiment.

Endogenous growth models are generally designed to address long‐term trends of growth. They explain how the economy converges with or diverges from a balanced growth path and they characterize aggregate behavior, given the optimization problem faced by a representative agent that maximizes consumption utility. In such frameworks, only potential output matters and all decisions, by firms and households, are taken on the assumption that any expectations on the value of the output gap do not interfere with the agents' behavior. Introducing consumer sentiment, a conventional growth model is modified in order to understand how effective output eventually deviates from the balanced growth path.

The proposed framework allows one to introduce nonlinear dynamics into the model, making it feasible to obtain, for reasonable parameter values, endogenous fluctuations. These are triggered by a Neimark‐Sacker bifurcation.

By introducing consumer confidence or consumer sentiment, it is possible to integrate the evaluation of growth and cycles into a unified framework. It is possible to explain business cycles as the result of the consumers' reaction to the expected performance of the economic system.

This paper reviews one of the crucial issues in the recent growth literature concerning the hypothesis of cross country convergence of levels and growth rates of income per capita implied by the neo‐classical growth model, both in the Solow‐Swan and Rampsey‐Cass‐Koopmans versions. The alternative endogenous growth models, consistent with permanent income inequality, are considered. Convergence to a common income level versus divergence is discussed from a theoretical point of view. Then, empirical tests of the convergence property are presented. What emerges is that Barro type regressions and their findings about “conditional” convergence are questionable and cannot be used to give a definitive response on this issue.

The purpose of this paper is to provide further insights into understanding the finance‐growth nexus by verifying the hypothesis that financial development promotes economic growth through its capacity to attract increased international migrant remittances to Ghana.

A dynamic equilibrium‐correction mechanism model for the period 1987(3)‐2007(4) was estimated following the Johansen cointegration procedure. This approach produced maximum likelihood estimators of the unconstrained cointegrating vector, and suggested the number of cointegrating vectors without relying on an arbitrary normalization.

The findings reveal two stylized facts with reference to Ghana. First, although financial development Granger‐causes international migrant remittance inflows, it is in itself directly detrimental to endogenous growth. Second, international migrant remittance inflows are statistically significant in explaining variations in endogenous growth in the short run as well as in the long run.

Since directly, financial development hampers endogenous growth, but Granger‐causes increased inflows of migrant remittances, and these remittances impact positively but marginally on endogenous growth, it follows that the sequencing of implementing Ghana's financial reform programmes should be re‐examined, whilst an enabling environment is created to induce Ghanaians living abroad to remit home through official channels.

International migrant remittances were found to be statistically significant in promoting endogenous growth, albeit marginally. Financial development does not directly engender growth, unless it succeeds in attracting non‐debt foreign capital in the form of remittances through the formal sector. Financial development causes migrant remittance inflows which impact positively on growth.

This paper aims to investigate empirically whether Sukuk financing is boosting the economic growth in Southeast Asia within the framework of the endogenous growth model.

This paper applied dynamic panel one-step system generalized method of moments as an optimal estimation approach to investigate the impact of Sukuk financing on economic growth in Southeast Asia spanning from 2013Q4–2019Q3. Sukuk financing was proxied by the total issued Sukuk holdings, while economic growth was proxied by gross domestic product. The sample covered all full-fledged Islamic financial institutions in the most developed Sukuk financial markets countries in Southeast Asia (Malaysia, Indonesia and Brunei).

The findings demonstrated that Sukuk financing is boosting economic growth in Southeast Asia, which reflects the significant role of the Islamic financial markets of Sukuk as a vital contributor to economic growth.

This paper would fill the literature by investigating the link between Sukuk financing and economic growth in Southeast Asia within the framework of the endogenous growth model, as the outcome of this paper serves as a guide for financial researchers, decision-makers and policymakers to improve the Sukuk market globally as an alternative financing source for the best contribution to economic growth.

This paper is the first that investigates empirically the link between Sukuk financing and economic growth in Southeast Asia with a new theoretical context of the endogenous growth model to gain robust information about this link.

The purpose of the paper is twofold: to construct and analyze a novel endogenous growth model, in which unbounded growth is possible without the need to assume increasing returns to scale, and to use the model to estimate the long-run (or dynamic) costs of recessions.

In the proposed model, endogenous technology and human capital accumulation serve as the “twin engines of growth.” Simulations are used to derive growth rates consistent with long-term experience of developed countries, to understand better the differences between balanced growth and unbounded growth and to provide an estimate of the dynamic costs of capacity utilization shocks that produce business cycle-like behavior.

Conservative calculations show that the costs of the capacity shocks can be large – about 1.5 percent of the present value of output over a 100-period horizon. The theoretical model also suggests that differences in the technology production and human capital accumulation functions, possibly due to differing institutions, may help explain diverse growth experiences.

The paper, for first time, combines two strands of the economic growth theory – endogenous technology and endogenous human capital production – into a single model. It uses the implications of the model to argue, through simulations, that the benefits of counter-cyclical policies are potentially large in the long run.