On Poverty Traps and Equilibria in Growth Models

Abstract: We show that, contrary to a widely spread error, when the savings and the population growth rates are constant, an unstable equilibrium cannot exist in a neoclassical model, because it would imply an increasing average productivity of capital and therefore a negative marginal productivity of labor. As a consequence, a poverty trap, a dire reality, cannot be explained by such an unstable equilibrium, nor cannot it be eliminated by a capital "big-push". We finally give necessary conditions for an economy to escape a poverty trap

The 1956 contribution to economic growth theory by Robert Solow: a major landmark and some of its undiscovered riches

The famous ‘1956' contribution by Robert Solow was always thought to be central to positive, or descriptive, economic growth theory. We show that it is also at the core of optimal growth, because the Fisher equation of competitive equilibrium is nothing short of an Euler equation; it corresponds to the maximization of the sum of discounted consumption flows. From this equation an optimal savings rate results with reasonable, very reachable values. We also show the importance of the elasticity of substitution: there is a threshold value of this parameter leading to a permanent growth rate of income per person that is above the labour-augmenting rate of technical progress, and that rate does depend upon the investment-saving rati

Enhancing Academic Achievement for Students Living in Poverty Through Leadership and Professional Learning Communities (PLCs)

With the persistent increase in the number of students living in poverty coupled with community pressure to improve academic achievement for all learners, educational leaders have been pursuing initiatives to enhance success for all their students. This researcher surveys the literature on the correlation between academic achievement and socio-economic status in twenty-five elementary inner city schools in Toronto. The study examines leadership and professional learning communities (PLCs) in high performing schools serving students from poor communities. The mixed methods sequential approach was applied. Stratified sampling strategy was used to collect Education Quality and Accountability Office (EQAO) data on grade three students in reading, writing and mathematics for three consecutive years in order to identify high performing schools. Teacher questionnaires were administered to explore the impact of leadership and professional learning communities (PLCs) in developing instructional practices. Information collected from principals' interviews explores leadership practices that support educational achievement in high performing schools. Results from the findings will support schools in their attempts to accomplish enhanced academic achievement for all learners

Variable markups and capital-labor substitution

We provide new estimates of the elasticity of capital-labor substitution (?) and the bias in technical change allowing price markups to change over time as shown in De Loecker and Eeckhout (2017). Our estimate of ? is in the region of 0.8 and technical change is net capital-augmenting

Production technology estimates and balanced growth

Capital-labor substitution and TFP estimates are essential features of many economic models. Such models typically embody a balanced growth path. This often leads researchers to estimate models imposing stringent prior choices on technical change. We demonstrate that estimation of the substitution elasticity and TFP growth can be substantially biased if technical progress is thereby mis-specified. We obtain analytical and simulation results in the context of a model consistent with balanced and near-balanced growth (i.e., departures from balanced growth but broadly stable factor shares). Given this evidence, a Constant Elasticity of Substitution production function system is then estimated for the US economy. Results show that the estimated substitution elasticity tends to be significantly lower using a factor-augmenting specification (well below one). We are also able to reject conventional neutrality forms in favor of general factor augmentation with a non-negligible capital-augmenting component. Our work thus provides insights into production and supply-side estimation in balanced-growth frameworks

Energy-Extended CES Aggregate Production: Current Aspects of Their Specification and Econometric Estimation

Capital–labour–energy Constant Elasticity of Substitution (CES) production functions and their estimated parameters now form a key part of energy–economy models which inform energy and emissions policy. However, the collation and guidance as to the specification and estimation choices involved with such energy-extended CES functions is disparate. This risks poorly specified and estimated CES functions, with knock-on implications for downstream energy–economic models and climate policy. In response, as a first step, this paper assembles in one place the major considerations involved in the empirical estimation of these CES functions. Discussions of the choices and their implications lead to recommendations for CES empiricists. The extensive bibliography allows those interested to dig deeper into any aspect of the CES parameter estimation process