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Some Remarks on the Effects of Productivity on Growth

Author

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  • Zsolt Gilányi

    (Department of Microeconomics, Corvinus University of Budapest)

Abstract

Standard economic models predict that a ceteris paribus increase in the overall productivity results in an increased production if the economy departs from an equilibrium state. We show that this result is valid under specific conditions In other cases, even if the initial conditions of an economic system are so that the economy converges into (or starts from) an equilibrium state, the increase of overall productivity generally results, in the long run, in the collapse of the economy due to the unbalanced change in the money holdings. Hence, in general, an appropriate expansive monetary policy should accompany the increase of productivity.

Suggested Citation

  • Zsolt Gilányi, 2007. "Some Remarks on the Effects of Productivity on Growth," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 5(1), pages 14-20.
    • Handle: RePEc:zna:indecs:v:5:y:2007:i:1:p:14-20
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    References listed on IDEAS

    as
    1. Robert U. Ayres & Katalin Martina, s, 1996. "Wealth accumulation and economic progress," Journal of Evolutionary Economics, Springer, vol. 6(4), pages 347-359.
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    More about this item

    Keywords

    economic growth and aggregate productivity; multisector growth; monetary growth;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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