On the sustainability of maximizing GDP Growth

Yong He

MPRA Paper from University Library of Munich, Germany

Abstract: Sparked by Baumol’s revenue- versus profit-maximizing models of the firm, this paper using a growth model shows that if a nation seeks GDP-maximizing growth with capital expansion as driving force, the model could work only under the assumption that the consumers’ aversion to under-consumption, an unavoidable consequence of over-investment, remains constant, and the effects of under-consumption are not accumulative. Otherwise, it has to decelerate growth and ultimately converges to the neoclassical growth model with consumption optimality. The empirical evidence on growth models of ex-Soviet Union, China and Eastern Asia are examined to explore the extent to which the model captures the real world.

Keywords: GDP-maximizing growth; under-consumption effects; transition between steady states; sustainability; Chinese model. (search for similar items in EconPapers)
JEL-codes: E20 O40 O50 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:88549

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