Search results

1 – 1 of 1
Open Access
Article
Publication date: 8 December 2022

Germana Giombini, Francesca Grassetti and Edgar Sanchez Carrera

The authors analyse a growth model to explain how economic fluctuations are primarily driven by productive capacities (i.e. capacity utilization driven by innovations and…

1375

Abstract

Purpose

The authors analyse a growth model to explain how economic fluctuations are primarily driven by productive capacities (i.e. capacity utilization driven by innovations and know-how) and productive inefficiencies.

Design/methodology/approach

This study’s methodology consists of the combination of the economic growth model, à la Solow–Swan, with a sigmoidal production function (in capital), which may explain growth, poverty traps or fluctuations depending on the relative levels of inefficiencies, productive capacities or lack of know-how.

Findings

The authors show that economies may experience economic growth, poverty traps and/or fluctuations (i.e. cycles). Economic growth is reached when an economy experiences both a low level of inefficiencies and a high level of productive capacities while an economy falls into a poverty trap when there is a high level of inefficiencies in production. Instead, the economy gets in cycles when there is a large level of the lack of know-how and low levels of productive capacity.

Originality/value

The authors conclude that more capital per capita (greater savings and investment) and greater productive capacity (with less lack of know-how) are the economic policy keys for an economy being on the path of sustained economic growth.

Details

Journal of Economic Studies, vol. 50 no. 7
Type: Research Article
ISSN: 0144-3585

Keywords

Access

Year

Last 6 months (1)

Content type

1 – 1 of 1