Can the augmented Solow model explain China’s remarkable economic growth? A cross-country panel data analysis

China’s economy grew at an average annual rate of 9% over the last three decades. Despite the vast empirical literature on testing the neoclassical model of economic growth using data on various groups of countries, very few cross-country regressions include China and none of them particularly focuses on the explanation of China’s remarkable economic growth. We attempt to fill this gap by utilising panel data on 146 countries over the period 1980–2004 to examine the extent to which the rapid growth of China and the huge gap in the growth rate between China and other countries can be explained by the augmented Solow model. Using system GMM estimation techniques, we find that, in spite of the restrictive assumptions involved, the Solow model augmented by both human capital and structural change provides a fairly good account of international variation in economic growth. In particular, China’s relative success in economic growth is due to high physical capital investment, conditional convergence gain, dramatic changes in the structure of employment and output, and low population growth.     

An econometric model of France during the 19th century

A model of the French economy in the 19th century is presented, first, to test the consistency of the national income series that are currently being developed and, second, to highlight the factors that account for the slowing down of the country's economic growth during the middle decades of that century. A few simulations of the model are also presented to give a clearer view of the structural change the economy experienced, and as an illustration of the general working of the model and its potential applications.     

An assessment of polish economic development in the 1970's

The economic policy of the Gierek administration is examined alongside the economic performance of the Polish economy in the 1970's. From very favourable economic circumstances in the early seventies the authorities encouraged a consumption and investment boom of which they soon lost all control. Sharp reversals in economic policy were later applied in order to deal with the chronic macroeconomic disequilibrium produced by the uncontrolled expansion. Policy zigzags have resulted in a highly disorganised economy increasingly ‘managed’ in an arbitrary way by central directive. The period was one of costly mistakes and lost opportunities.     

Marx's socialism in the context of his typology of economic systems

This paper restates the major structural properties of Marx's conception of socialism in the broader context of his typology of economic systems, commencing with feudalism and ending with his unique vision of postcapitalist economy. It also discusses briefly some of the major applications of this typology to contemporary practice, notably to Soviet experience. Clarification and systematic examination of Marx's views on the basic organizational properties of socialism in the broader context of Marx's views on economic systems, although important in its own right, can also sharpen critical understanding of debates concerning relations between the classical Marxian vision and contemporary practice.     

On the level of optimal capital import in a decentralized competitive economy

In a competitive economy, capital import will affect the distribution of income among domestic economic units. Our main aim is to determine the optimal level of capital import, given that the distribution of income among people is accounted for. In order to consider explicitly the effect of capital import on saving behavior, we shall adopt a simple, two-period life cycle growth model. It will be shown that in order to know if the government can increase everybody's long-run utility, the criterion of the golden rule is important.     

Controllability and the theory of economic policy: A critical view

It is argued in this paper that the concept of controllability in spite of its intuitive appeal is of limited interest for the theory of economic policy. Controllability implies that a given target can be attained even if the number of instruments is less than the number of independent targets. But there is no guarantee that the economy will be able to stay there. Tirbergen's rule is concerned with the existence of a static equilibrium solution. The controllability concept is concerned with the existence of a dynamic path towards it. But it does not imply that controllability is a dynamic generalization of Tinbergen's rule.     

Analysis and Forecast of the State of Environmental Protection in Russia

The main purpose of the present study is to analyse the emission dynamics of atmospheric and water pollutants in Russia and cost of their removal in the 1980s and early 1990s, and to forecast them by means of a Dynamic Input–Output Model according to different scenarios of future economic development till 1998. Main results of the work are:– methodological principles have been elaborated for singling out the environmental protection sector within the national economy;– a method has been offered for including the ecological block into a Dynamic Input–Output Model of the Russian economy;– a method of data preparation has been elaborated for the ecological block of the above-named model, the data base which characterizes the ecological situation in Russia has been formed and analysed;– calculations for 1994–1998 have been executed for forecasting the economic and ecological development of Russia using the above-mentioned model and the results obtained have been analysed. The results showed that if the existing tendencies towards low environmental protection capital costs remain the same, then the negative environmental impact will increase. In order to implement ecological programs and international agreements, to increase the proportion of removed pollutants, it is necessary to increase substantially expenditures on purifying water and air resources. The proportion of environmental protection investments in the total amount of the national economy capital costs should increase by up to 12–40% according to different scenarios of the economic development and different purposes of the environmental protection policy.     

Bacon and eltis on growth,government, and welfare

In a recent book, Robert Bacon and Walter Eltis attribute Britain's relatively slow economic growth since 1961 to rapid expansion of her public sector. The article disputes both their analogy between the public sector and the physiocrats' sterile sector and their contention that wage demands increase because the marginal public expenditure is not worth the taxes it requires. The wage-tax spiral, if of empirical significance, seems likely to proceed whatever the virtues of public expenditure. This is a fault in the industrial relations system and is by no means sufficient reason to judge the public sector overgrown.     

OPEC: Retrospective and prospects 1973–1990

Using a relatively simple economic model of the world oil market, we review what has happened since the price quadrupling of 1973–1974, comparing the model's results with actual historical data. We also make projections through 1990, assuming that OPEC's real price is either held constant or determined by a target-capacity-utilization pricing rule.     

Land rents,optimal taxation and local fiscal independence in an economy with local public goods

A general equilibrium model of an economy with cities, farms and free migration of population is constructed. The cities produce internationally traded goods via production functions subject to economies of scale. They also produce housing and a local public good. Two areas are defined to be disjoint if households performing an economic activity in one area are not operating in the other. An area is exclusive if it is disjoint to its complement. The economic surplus of an area is then defined to be the value of the area's net export of goods and resources. Local efficiency of an area is defined to be a state in which its economic surplus attains its maximum value. This state is proved to be a necessary condition for Pareto optimality of the economy. It is then proved that beside Piguvian corrective taxes the only taxes necessary and sufficient to finance local government activities efficiently, are taxes on land rents. Furthermore, if jurisdiction of a local government is over an exclusive area no intervention of central government is necessary, and local authorities can be fully autonomous. If the economy can be divided into pairwise disjointed exclusive areas, those areas are optimal jurisdictions in the sense that efficiency in the economy can be achieved with local authorities only.     

Barking Up the Wrong Tree: A Reply to Haynes & Husan

The Albanian economy in the 1990s experienced a rapid recovery from its near-collapse in 1992. The rapid economic growth between 1993 and 1996 was exceptional by East European standards, and represented the highest rate of sustained economic growth of all transition economies. This investigation indicates that the standard explanations for recovery and growth in transition economies, such as the pace of economic reform or the levels of domestic and foreign investment, do not adequately explain the rapid growth of the Albanian economy. Factors specific to Albania also need to be considered. The main conclusion drawn here is that the success of the Albanian economy in the mid-1990s rested largely upon the inflow of remittances from Albanians working abroad. These remittances are shown to have been much greater in value than was previously assumed by the IMF: in the region of $700 million per annum rather than $400 million. Remittances are also found to have played a much greater role in Albania's economic recovery than was previously recognised. It is demonstrated that the rise of pyramid investment schemes in 1996 was closely linked to the inflow of remittances. Such schemes are also found to have played a part in fuelling the rapid economic growth in the Albanian economy, before their collapse in 1997.     

Risk and decentralization in the theory of economic policy

In this note, uncertainty is incorporated into Tinbergen's model of economic policy. If the Central Planning Authority's preferences amomg subjective probability distributions can be described by a von Neumann-Morgenstern utility function, and if certain restrictions are imposed on these probability distributions, then the Authority can delegate control over partitions of the instrument vector to its Agencies and so decentralize its decision process.     

China's cellular economy: A test of the fragmentation hypothesis

Using recent data pertaining to transportation performance, this paper tests the hypothesis that China's economic growth since the mid-1950s has been characterized by a tendency toward local self-sufficiency. Growth of freight transportation in China is compared with the growth of freight transportation in other large countries, with the growth of aggregate output in value terms, and (by commodity) with the growth of output in physical terms. The results are consistent with the fragmentation hypothesis. Fragmentation in China appears to be associated with the manner in which the economy is partitioned for planning purposes.     

价格粘性下人民币不同升值模式对中国经济的影响研究

文章以衰减函数的方式将新凯恩斯学派提出的价格粘性理论引入中国动态可计算一般均衡模型中,使模型更符合经济系统中价格调整规律,并利用模型模拟渐进式升值和快速升值两种不同的人民币升值模式对我国经济的影响。模拟结果表明,在价格粘性的作用下,人民币快速升值将在短期内对我国实体经济产生较大的负面冲击,GDP增速下降最高达1.6个百分点,失业率明显上升,而渐进式升值最高只有0.67个百分点;快速升值能有效抑制我国的通货膨胀和促使我国贸易再平衡,最多使我国CPI增速下降3.6个百分点和贸易顺差占GDP比重下降1.06个百分点,并且在长期内对实体经济的负面效应略小于渐进式升值。因此,在不同的经济形势下应采取不同的人民币升值模式。     

Excess supply equilibria

This paper addresses a fundamental problem in economic theory: How can there be equilibria of the economic system where some commodity is in excess supply, yet that commodity's relative price shows no tendency to fall? Of course, the principal example of such a phenomenon is an economy experiencing a prolonged period of involuntary unemployment of the labor force during which there is no significant change in the real wage.In the following pages, I shall describe a two-commodity, general equilibrium model that has a continuum of unemployment equilibria, one for any given unemployment rate. The important feature of this model is that workers establish their wage rates in an attempt to maximize expected utility. The information upon which these wage setting decisions are based is provided by actual labor market transactions.Despite the voluntary nature of the wage setting decision, I shall argue that each equilibrium of this economy exhibits involuntary unemployment in the Keynesian sense. For there will always be another equilibrium with a lower real wage, a higher level of employment, and at which (at least when workers are risk neutral) each worker achieves a higher level of expected utility.     

A note on the marginal tax rate in a finite economy

The marginal tax rate is shown to be non-negative in Guesnerie and Seade's model of nonlinear pricing in a finite economy under assumptions that are as mild as those customarily adopted in nonlinear tax models with a one-dimensional continuum population.     

Quesnay's model of economic development

The article examines François Quesnay's ideas on economic growth and technical progress in agriculture. It formalizes these ideas as a dynamic model which describes the relationship between a shift to high yielding capital-intensive methods of production and growth and income distribution, taking into account Quesnay's understanding of the institutional aspects of land tenure in his days.     

Kaldorian approach to Greek economic growth

In the last 30 years, Greece has experienced a rapid of economic growth which has transformed the economy and enable it to become a member of the EEC. Specifically Greece transformed itself from an agricultural economy with virtually no industrial base to an economy with a significant industrial sector and consequently a relatively high income per capita. One can explain this on the lines of a Kaldorian framework. In this paper we provide an outline of Kaldor's growth model and test its relevance to the economic experience of Greece during the 1967–1988 period. The empirical results suggest that the model can adequately explain the development in the economy to a considerable degree.     

The value of changes in individual risk in a large mixed economy

Changes in an individual's risk will affect all other individuals in the economy because of the interdependence created by the government's budget constraint. If government policy is optimal, these spillover benefits are measured by the change in the expected government budget surplus.     

A comparison of purchasing power parity and consumption levels in Austria and Czechoslovakia

An attempt is made to estimate purchasing-power parity (Par) for a comparison of Czechoslovakia's consumption level with Austria's in 1980. The Par calculation is based on modified official consumer baskets of both countries and the author's own assessment of quality and structural differences. The main conclusion is that economic development in Czechoslovakia was significantly slower than in Austria. A comparison with results of a methodologically similar study of 1964 implies a significant worsening of Czechoslovakia's relative living conditions.