Economic growth with subsistence consumption
نویسنده
چکیده
Four stylized facts of economic growth in DCs are set up initially. Despite its obvious simplicity the linear growth model with subsistence consumption is able to reproduce two of them: a rise in the saving rate along with per capita income as well as b-divergence. The rate of convergence shows extraordinarily low values at early stages of economic development. Hence, the big diversity in growth rates can partly be explained to represent transitional phenomena. An extension of the basic model additionally allows an explanation of the hump-shaped pattern of growth. q 2000 Elsevier Science B.V. All rights reserved. JEL classification: O1; O4
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