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

David Greasley, Nick Hanley, Eoin McLaughlin and Les Oxley

No 2014-08, Stirling Economics Discussion Papers from University of Stirling, Division of Economics

Abstract: 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.

Keywords: comprehensive wealth; US; modern growth theory; inter-temporal utility maximisation (search for similar items in EconPapers)
Date: 2014-08
New Economics Papers: this item is included in nep-ger, nep-gro, nep-his, nep-hpe and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/1893/20986

Related works:
Working Paper: The Emperor Has New Clothes: Empirical Tests of Mainstream Theories of Economic Growth (2014)
Working Paper: The Emperor Has New Clothes: Empirical Tests of Mainstream Theories of Economic Growth (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:stl:stledp:2014-08

Access Statistics for this paper

More papers in Stirling Economics Discussion Papers from University of Stirling, Division of Economics Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA. Contact information at EDIRC.
Bibliographic data for series maintained by Liam Delaney ( this e-mail address is bad, please contact ).