Abstract This paper explains that the neoclassical growth model, also known as the Solow-Swan model, was considered the basis of any research on economic growth; however, the neoclassical model treated technological progress as an exogenous factor to the model, and this led to some puzzles that it could not answer. The author points out that the endogenous model that appeared in the 1980s stressed the importance of immaterial resources that had an impact on economic growth, resources such as human capital and R&D that improved technological progress and increased economic growth; the subsequent models that followed were included in the New Growth Theory trend and endogenized economic growth. The paper examines three cases of fiscal policy using government spending as growth determinants: increased government expenditures without raising taxes, tax reduction without reducing government expenditure, and increased government expenditure with constant taxes. Economic notation used.
Table of Contents
The Solow-Swan Neoclassical Growth Model
The New Growth Theory and Endogenous Models
Fiscal Policy and Government Spending as Growth Determinants
Literature Review
From the Paper "We should take a closer look at these statements starting from the Cobb-Douglas production function Y = AKaL1-a. The idea is to endogenize the exogenous factor A. In order to do so, let's frst write a Cobb-Douglas production function for each individual firm:
Yi = Ai Ki aLi 1-a. Concerned with the factor Ai, Arrows argued that this is represents knowledge and learning accumulated in the society throughout time with collective investments and is a common and free good to all firms. How is it accumulated? Arrow relates this accumulation to the aggregate capital in an economy by the function Ai = Gz,
where G signifies the capital accumulation, which will be used in a proportion equal to z by the firm. Following in the Cobb-Douglas individual production function, Yi = Gz Ki aLi 1-a. Note that in this equation, K, L and Y are individual firm-related, while G is economy wide, as we have agreed above. If we consider that at an aggregate level, G = K, then our equation becomes Y = K a+z L 1-a."
Abstract A discussion of how the economic questions of social issues are answered. Economic principles and application are also being reinforced through the issues examined. This paper explains the few ways in which these questions are answered. It discusses three distinct types of economies: a market economy, a command economy and a mixed economy. It also identifies the failure of market mechanisms and government failure. This study of different economic systems is relevant in understanding the social issues and related policies. Whether or not government should provide assistance to market where market failure exists. It also discusses the mixture of market mechanism and government intervention in most of the countries today such as Australia.
From the Paper "Any economy is faced with three basic problems: what to produce, how to produce and for whom to produce. Moreover, contemporary social issues are imperative and economics principles provide a basic analytical tool useful in understanding of social issues as well as solutions to solve these issues. Broadly speaking, free market economy and command economy are two alternative approaches to these questions. (Materano& Atkinson, 1996:33) There are large difference between the extreme of a pure market economy and a command economy. These two economy systems do not exist in their pure forms in reality. Market failure does occur in certain situations, which is a situation the market economy does not provide well enough answers to the ?what, how and for whom ? questions and there is a role for government to improve the situation. However, even in the case of market failure, the government may do worse than the market, which is called the government failure."
Abstract This paper summarizes the economic and political thought of key economists and classifies them according to the level of government control on the economy. Karl Marx and Friedrich Engels, who believed in the public ownership of productive property, are the advocates of strong, centralized government control. At the other end, Adam Smith, Joseph Schumpeter, Ludwig von Mises and Milton Friedman all espoused laissez faire economics. The middle ground is the fiscal policy of John Maynard Keynes. The second part of this paper discusses why the Keynesian model is both informed by and compatible with Christian principles. In the third part the writer recommends against increasing government regulations on the United States economy in the face of technology such as Napster and cloning. Instead, he argues that a careful application of Keynesian programs would ensure that the Unites States economy remains healthy and competitive.
From the Paper "The fact that capitalism continues to flourish, despite the predictions of Marx and Schumpeter, are testament to this economic system's primacy. Though they had different reasons for sounding capitalism's death knell, Marx and Schumpeter made a common mistake by underestimating how much technology revives capitalism. Marxist scholars such as Lenin later showed how capitalism has involved into imperialism, given that technology allows capitalists to extend their private ownership beyond the nation-state. Schumpeter, on the other hand, did not anticipate how these technology such as the internet have given rise to a new kind of ?daring entrepreneur,? who have in turn created new industries and opened new markets."
Abstract The paper describes the hardships that both South Korea and Israel endured during the 1960s. The paper then discusses the role of government financing, investment and the use of economic nationalism in both countries and shows the similarities between the economic evolutions and the state's interventions. The paper relates, however, that the current economic situation is somewhat different; in South Korea, the decrease in government intervention led to significant corruption, while in Israel this led to economic innovation and integration in today's modern world of globalization.
From the Paper "Without doubt, the 1960s represent the main time frame in which South Korea and Israel laid the framework for future economic prosperity. Not only that, the most torrid economic development occurred at this time. The most critical propellant of this prosperity, of which will be the primary topic of this paper, was the state-led policy linkages shared between South Korea and Israel. Discussion will be limited to the 1960s because this decade predated nearly twenty years of economic decline for both nations, and also because of the above-mentioned reasons. Further exploration of this intervention will focus on government financing, investment, and the use of economic nationalism."
Abstract This paper examines the effect of Japanese debt on economic growth. The author considers the possibility that the Japanese debt could cripple the entire world economy. Economic growth is discussed not only from the standpoint of Japan, but also from the standpoint of other members of the world economy. The author presents background information on the economic rise, and potential fall, of Japan. The paper also consists of prominent models and theories that are presented and explained, to illustrate the economic effects of the debt of the Japanese government. Paper includes charts and tables.
Outline:
Abstract
Theory
Data
Conclusions
From the Paper "In order to put the significance of the consideration of Japanese economics into perspective, consider for a moment the fact that Japan is the second world economic superpower, behind the United States (Witter, 1997). Keeping that in mind, there are several key economic indicators that show a true storm brewing within the Japanese economy due to the debt of the Japanese government; for example, current figures show that the debt of the Japanese government outweighs their GPD (Gross Domestic Product) by an obscenely high 170%, the Japanese National Bank is insolvent, and there is a glut of outstanding JGBs (Japanese Government Bonds (Posen, 2000). While all of these statistics are staggering, there are some very informative models and theories that illustrate this problem in greater depth; the best of these models and theories will now be presented and discussed in an effort to add another dimension to this research and provide a complete understanding of not only the topic, but also its significance to everyone in the developed world and beyond."
Abstract This essay compares and contrasts two theoretical models regarding economic inequality. The first is presented by John Locke in his "Second Treatise of Government", which addresses the origins of economic inequality. The second, which is in sharp distinction to these views, is presented by French philosopher Jean-Jacques Rousseau in his "Discourse on the Origin of Inequality". The paper outlines the strengths and weaknesses of both. It argues that, while both works are very similar in their imagined origins of economic inequality in the early history of property, they differ radically in how they represent property and the justifications for its differing accumulations that ultimately give rise to economic inequality. The paper concludes that Locke envisions property and moderate levels of economic inequality as a good thing, while Rousseau condemns this inequality as a corrupting influence upon human society in every respect.
From the Paper "However, while there is a superficial similarity between how Locke and Rousseau each conceive of the state of nature, there is one important distinction between the two: property. While Locke conceives, as noted above, of an equality of property as existing in the state of nature, Rousseau contends that the innovation of property itself marked the ending of the state of nature and the beginning of human society.
"This is an important difference, and it goes to the heart of how each philosopher conceives of economic inequality. For example, it is clear from the outset of Rousseau's description of the state of nature and its defining characteristics that he sees property as not only a negative aspect of human society but as being fundamentally illegitimate as well."
Abstract This paper first provides a brief overview of Milton Friedman's and Arthur Okun's views on the economic role of government and then addresses their differences. One of the main topics of the paper, however, is the way in which the scholars actually agree, which is only apparent after scratching below the surface a bit.
From the Paper "Milton Friedman and Arthur Okun are considered by many to be on opposite ends of the spectrum when it comes to ideas about how to redistribute income from the rich to the poor. Friedman is by most definitions a conservative in this context, while Okun is usually placed in the liberal camp."
Abstract "The environment includes factors outside the firm which can lead to opportunities for or threats to the firm. Although there are many factors, the most important of the sectors are socio-economic, technological, supplier, competitors, and government." The paper goes through each factor and explains how each one affects business operations with an emphasis on business in a global economy. A special emphasis is placed on the role of governments in the globalization process.The paper also includes two other factors--physical or natural environment and the global environment.
From the Paper "Economic environment refers to all forces, which have an economic impact on business. Industrial production, agriculture, planning, basic economic philosophy, infrastructure, national income, per capita income, money supply, price level, population, savings, stages in the economic development and trade cycles are major factors which make up the total economic environment. There is a close relationship between management and its economic environment. A business obtains all its needed inputs from the economic environment and it in turn depends on the economic environment to absorb its output."
Tags: Environment, Government, tariffs, technology, competition, world
Abstract The paper relates that in "The New Economics," Deming offers a vision for industry, government and education based on effective knowledge, information management and sustainable growth. The paper asserts that the author is profoundly optimistic and forward-thinking in his views of knowledge, human potential and the capacity for positive transformation. The paper discusses how Deming extends far beyond the scope of textbook economics, looking at issues related to human welfare and well-being. The paper concludes that "The New Economics" offers a visionary theory of revolutionary change, not just in American economics but in American culture.
From the Paper "The New Economics is succinct: less than 250 pages including the index. Accessible in its tone and layout if not its writing style, the book remains viable as a trade book but its author's background and credibility and his theoretical underpinnings make The New Economics required reading for students, scholars, and professionals. The crux of The New Economics is what Deming calls "A System of Profound Knowledge," which he outlines in detail in Chapter 4. The book is divided into ten sections plus an appendix and index."
Abstract This essay examines how economic development had a tremendous impact on the middle ages and early modern period in our history. It explains that the early modern period brought organized government and the Industrial and Commercial Revolutions, which helped establish different nation states as European powerhouses. The paper also looks at the fall of the Roman and Carolingian Empires to the crusades to the Black Death, and points out that there were many tragic and fortunate events that led to improvements in technology and the creation of capitalist economies. The paper then discusses the economic theory of mercantilism and the decline of Christian theology. In conclusion, the paper shows that economic development had a tremendous impact on the Medieval and early modern period due to vast improvements in centralized governments and trade routes which created an influx of money and wealth for European nations.
Outline:
Roman Empire
Middle Ages
Early Modern Period
From the Paper "Diocletian and Constantine were responsible for the political reformation of Rome in the fourth century (Spielvogel, 2008, p.116). Diocletian realized that the empire had grown far too large for just one single ruler so he divided the land up into four separate administrative regions (eventually western and eastern parts). Each had its own leader although he still retained absolute power over Rome. Civil and military reforms were now considered separate services from one another and each had its own hierarchy of administrators yet still worked under the overall Roman budget. This separation of powers is commonly used today in capitalist countries. However, this change used up large sums of the budget yet the roman population was not growing and there was no one else left to tax. This presented a problem and they soon realized their empire was suffering from inflation. Diocletian attempted to install new taxation prices but despite severe punishments, was unable to enforce the policies and they did not work. Constantine continued to drain the public funds when he decided to build a "New Rome" near Byzantium, named Constantinople."
Abstract This paper discusses the U.S. government and Senate's approach to revive the economy. However the writer concludes that from their stimulus packages, it seems that there is great discrepancy in both ideas of stimulus.
From the paper:
?The House was of the proponent that the government should cut down taxes so that the country would open up doors to investments thereby increase jobs. While the Senate proposed to cut down expenditure in order compensate for the emergency spending of the Attack of $ 40 billions.?
Tags:economic, stimulus, package, White, House, Senate, U.S., government, investments, jobs
Abstract This paper is an in-depth analysis of the affects of September 11th on the Japanese economy. Several different factors contributing to the deepening recession in Japan are examined in detail, including unemployment statistics, the findings of the Bank of Japan's Tanken survey, suicide figures and corporate restructuring. The changes in people's behavior, including expense accounts, dress and spending habits as a result of this recession and the change in Japan's credit rating and its affect on how government policy is affected by this change are also discussed in detail. The author also presents some of the government's policy attempts at dealing with this problem including new economic policies, tax reform, privatization schemes and the restructuring of the banking system. The effects that this has had on Japan's relations with China, especially in its trade relations are also discussed in detail.
Extensive bibliography but no footnotes, or endnotes.
From the Paper "According to a recent article in Bloomberg News entitled "Think Japan's Economy is Bad Now" Just Wait,? the situation will only get worse.' ? ?It's here where things get ugly,? ? the article states. ? ?As unemployment rises beyond today's record 5 percent, consumers may spend less. If already frugal households buy less, corporate profits fall further and so do asset values. Banks, then, may be forced to let more companies fail, boosting unemployment and reducing corporate profits. And so on and so on.? ? This is the very cycle Japan's policy makers have been dreading for years. To date, Tokyo has held things together with ultra-low interest rates and aggressive fiscal spending. Now that borrowing costs are at zero percent and Tokyo has papered markets with more bonds than investors can use, that's no longer possible. Credit rating agencies are sniffing around Japan's finances, wondering if it's time for another downgrade."
Abstract The author of this essay presents the standard libertarian position against government involvement in the business world. The premise of this paper, that the U.S. government's role should be restricted to protecting life and property of the citizens and should not have an essential role in regulating American businesses, is supported by citing the philosophy of Adam Smith from "The Wealth of Nations", by asserting that the economic prosperity that resulted from Roosevelt's domestic interventionist policies is largely myth, and that altruism, as a form of government philosophy, is unrealistic and impractical.
From the Paper "Ever since Adam Smith argued for laissez faire capitalism in his monumental treatise, The Wealth of Nations (1776), it has been proved time and again that the philosophy of "division of labor" and pursuit of "self interest" by the individual, results in creation of unprecedented wealth; thus improving the standard of living for everybody. This is because the division of labor results in a multiplier effect in which the society benefits tremendously from the sum of specialized knowledge of each individual. Furthermore, the freedom to pursue self interest by every individual to create wealth for oneself is the most powerful incentive imaginable and it ultimately works for the benefit of the whole society. The capitalist system, however, falters if the government interferes with the process in the form of ?regulations.? The degree of damage done to the economy is usually in direct proportion to the extent of the interference."
Abstract This paper examines how both a mugger and the government are manifestations of similar impulses and should be resisted for the protection of individual rights and the essence of the social contract. The paper cites various ideas of Locke, Rousseau and others on this issue and considers some of the ways the government has transferred wealth, with unintended consequences.
From the Paper "In the two stories told, the real victim in each case is the person whose money is being taken, whether by as mugger directly or by the government indirectly. Admittedly, the situation in the second instance is somewhat exaggerated, for it implies that the mugger and the politician are working together to achieve a transfer of funds. This is what often does happen in effect, without the direct collusion between the two and the real issue is that an injustice is being done in each case. In the first case, the individual walking down the street is harmed by being attacked and by losing his money, if only for a short time. In the second instance, that same person not only is robbed of his money but his freedom, as he is then imprisoned, essentially for objecting and for refusing to be robbed further."
Abstract This paper discusses free markets and how they are measured, citing the ideas of Neoliberalism, which constitutes a body of ideas that would reduce the role of government in economic affairs. This approach does not concentrate on equity and the redistribution of wealth but instead calls for government to concentrate on efficiency and growth. It explains that Neoliberals argue that equity cannot be achieved unless the economy is thriving, and state that past efforts to achieve equity through transfer payments and regulations have failed and have actually impeded the dynamism of the market.
From the Paper "Maintaining a free market has been a goal of the United States for some time, encouraging the development of free markets in parts of the world where that tradition has not held sway, and seeking to reduce trade barriers. The process of globalization has increased such activities and has also created new incentives for non-market economies to become market economies. Neoliberalism constitutes a body of ideas that would reduce the role of government in economic affairs. This approach does not concentrate on equity and the redistribution of wealth but instead calls for government to concentrate on efficiency and growth. Neoliberals argue that equity cannot be achieved unless the economy is thriving and state that past efforts to achieve equity through transfer payments and regulations have failed and have actually impeded the dynamism of the market. The neoliberal position also accepts the Classical Liberal argument that government has become a tool of special interests ..."
