Economic Growth Models and Sustainability
Economic models explain only a portion of the variation in the growth of national and regional economies. First, we compare advantages and limits of a variety of models (in particular, the Solow, Ramsey, and Romer growth models) in explaining economic growth. Furthermore, we introduce a bounded (logistic) population function is introduced to Romer’s endogenous model to more accurately describe the production function of a single economy in a sustainability context. This allows us to compare the growth rates, steady state (or lack thereof), and dynamics across these models analytically and by simulation for the long run. Although augmenting the endogenous model with bounded population growth more accurately reflects real world trends in theory, we use econometric analysis to examine whether using a logistic population growth is consistent with empirical evidence. We then move beyond the study of a single economy, expanding the models to include multiple economies engaged in trade. Finally, we discuss the relevance of these models for sustainability.
Ippolito, Sean, "Economic Growth Models and Sustainability" (2016). 2016 Undergraduate Research and Scholarship Conference. Paper 2.