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Mathematical Dynamics of Economic Growth as Effect of Internal Savings

By Alexei Krouglov

Abstract

Paper introduces mathematical models describing long-time effects of real savings on economic growth. Models are built for single-product and multiple-product economy with market forces presented through the system of ordinary differential equations. Modeling results show a limited long-run economic growth for occasional and constant-rate systematic internal savings, a steady long-run economic growth if acceleration rate of internal savings lies within the proper limit for every industry, and a steady long-run economic decline if acceleration rate of internal savings exceeds the suitable limit for certain industry. Modeling outcome also suggests that a long-run economic growth requires direct investment of internal savings into appropriate investment vehicles with exclusion from savings-investment chain the interest-rate-bearing bank accounts with clear danger of suffering a long-run economic decline in case of violation of the requirement.

Topics: E32 - Business Fluctuations; Cycles, O41 - One, Two, and Multisector Growth Models
Year: 2006
DOI identifier: 10.2139/ssrn.953548
OAI identifier: oai:mpra.ub.uni-muenchen.de:1262

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