Well-Behaved Versus ”Non-behaved” models of Growth: The Economics of Alice in Wonderland
نویسندگان
چکیده
Can an increase in the rate of savings slow down long-run growth ? Can a tax on capital lead to higher growth even though the revenue is not spend on R&D, or for some other productive purpose ? Is a perfectly competitive, non-distorted economy safeguarded against ’growth traps’, implying that ’free market’ development strategies always work ? The present study shows how any growth model with an infinite horizon consumer can be reduced to a so-called LI-LS diagram, leading to the answering of these and related questions. The answers are respectively: yes, yes, and no.
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