A model of economic growth with saturating demand

This study presents a model of economic growth based on saturating demand, where the demand for a good has a certain maximum amount. In this model, the economy grows not only by the improvement in production efficiency in each sector, but also by the migration of production factors (labor in this model) from demand-saturated sectors to the non-saturated sector. It is assumed that the production of a brand-new good will begin after all the existing goods are demand-saturated. Hence, there are cycles where the production of a new good emerges followed by the demand saturation of that good. The model then predicts that should the growth rate be stable and positive in the long run, the above-mentioned cycle must become shorter over time. If the length of cycles is constant over time, the growth rate eventually approaches zero because the number of goods produced grows.

Pro-poor growth or poverty trap? : estimating intergenerational income mobility in rural Philippines

Using an intergenerational database covering nearly a quarter of a century, we explored the degree of intergenerational income mobility among individuals who had grown up in rural Central Luzon, the Philippines. We found that the intergenerational income elasticity is significantly lower than unity, at roughly 0.23, indicating that the average income growth rate is higher for children born to poorer families. The detailed analysis, however, revealed that its magnitude significantly varies across percentiles in a U-shape. The results provide supporting evidence of multiple equilibria or poverty trap.