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Economic Performance Through Time: A General Equilibrium Model

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  • Wenli Cheng
  • Xiaonan Zhao

Abstract

This paper presents a simple general equilibrium model of economic performance through time. The model incorporates 4 main determinants of economic performance: technology, capital investment, the division of labor and institutions. It demonstrates that growth is not automatic even with technological progress. In order to maintain economic growth, it is important to continuously implement new technologies through capital investment. It also shows that institutional improvement promotes the social division of labour, which is an independent source of economic growth.

Suggested Citation

  • Wenli Cheng & Xiaonan Zhao, 2008. "Economic Performance Through Time: A General Equilibrium Model," Monash Economics Working Papers 01/08, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2008-01
    as

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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2008/0108economicchengzhouprint.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    economic growth; savings and investment; transaction costs; division of labor; financial and production institutions;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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