ECONOMIC PERFORMANCE THROUGH TIME: A GENERAL EQUILIBRIUM MODEL

Wenli Cheng and Xiaonan Zhao ()
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Xiaonan Zhao: Department of Economics, Room 303, Yiyuan Building, Renmin University of China, Haidian District, Beijing 100872, P.R. China

Division of Labor & Transaction Costs (DLTC), 2008, vol. 03, issue 01, 7-16

Abstract: This paper presents a simple general equilibrium model of economic performance through time. The model incorporates four main determinants of economic performance: technology, capital investment, the division of labor and quality of institutions. It demonstrates that growth is not automatic even with technological progress. In order to maintain economic growth, it is important to continuously implement new technologies through capital investment. It also shows that institutional improvement promotes the social division of labor, which is an independent source of economic growth.

Keywords: Economic growth; savings and investment; transaction costs; division of labor; institutions (search for similar items in EconPapers)
JEL-codes: C62 D E1 F F11 F12 F16 J2 J3 L O (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1142/S0219871108000355

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