The Emperor Has New Clothes: Empirical Tests of Mainstream Theories of Economic Growth


Autoria(s): Greasley, David; Hanley, Nick; McLaughlin, Eoin; Oxley, Les
Data(s)

10/03/2015

10/03/2015

01/08/2014

Resumo

Modern macroeconomic theory utilises optimal control techniques to model the maximisation of individual well-being using a lifetime utility function. Agents face choices over current and future consumption (with resultant implied savings decisions) seeking to maximise the present value of current plus future well-being. However, such inter-temporal welfare-maximising assumptions remain empirically untested. In the work presented here we test whether welfare was in (historical) fact maximised in the US between 1870-2000 and find empirical support for the optimising basis of growth theory, but only once a comprehensive view of what constitutes a country’s wealth or capital is taken into account.

Identificador

http://hdl.handle.net/10943/589

Idioma(s)

en

Publicador

University of Stirling

Relação

SIRE DISCUSSION PAPER;SIRE-DP-2015-01

Palavras-Chave #inter-temporal utility maximisation #modern growth theory #US #comprehensive wealth
Tipo

Working Paper