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Knife-edge conditions in the modeling of long-run growth regularities

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  • Growiec, Jakub

Abstract

Balanced (exponential) growth cannot be generalized to a concept which would not require knife-edge conditions to be imposed on dynamic models. Already the assumption that a solution to a dynamical system (i.e. time path of an economy) satisfies a given functional regularity (e.g. quasi-arithmetic, logistic, etc.) imposes at least one knife-edge assumption on the considered model. Furthermore, it is always possible to find divergent and qualitative changes in dynamic behavior of the model – strong enough to invalidate its long-run predictions – if a certain parameter is infinitesimally manipulated. In this sense, dynamics of all growth models are fragile and "unstable".

Suggested Citation

  • Growiec, Jakub, 2008. "Knife-edge conditions in the modeling of long-run growth regularities," MPRA Paper 9956, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9956
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    References listed on IDEAS

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    Cited by:

    1. Christian Groth & Karl-Josef Koch & Thomas Steger, 2010. "When economic growth is less than exponential," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(2), pages 213-242, August.
    2. LI, Defu & Bental, Benjamin, 2015. "Growth with Endogenous Direction of Technical Change," MPRA Paper 64124, University Library of Munich, Germany.
    3. Bugajewski, Dariusz & Maćkowiak, Piotr, 2015. "On knife-edge conditions with unbounded growth," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 274-283.
    4. Mand, Matthias, 2016. "On the Cyclicality of R&D Activities," VfS Annual Conference 2016 (Augsburg): Demographic Change 145472, Verein für Socialpolitik / German Economic Association.
    5. Li, Defu & Huang, Jiuli & Zhou, Ying, 2013. "Revisting the Steady-State Equilibrium Conditions of Neoclassical Growth Models," MPRA Paper 55045, University Library of Munich, Germany, revised May 2013.
    6. Li, Defu & Bental, Benjamin, 2016. "What determines the direction of technological progress?," MPRA Paper 71517, University Library of Munich, Germany.

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    More about this item

    Keywords

    knife-edge condition; balanced growth; regular growth; bifurcation; growth model; long run; long-run dynamics;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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