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Essay On Macro Economics
In the 1950s and 1960s various theories of economic growth have been developed and intensively studied. Especially Harrod 1948, Solow 1956, Verdoorn 1956, Domar 1957, Inada 1963 and Kaldor 1961 offered eye-opening insights into the theory and praxis of economic growth. In the fashion of that time, Bos and Tinbergen 1962 connected also economic growth with planning models in order to utilize economic progress in a low developed country or region as a strategy towards a higher level of development. Armstrong and Taylor 1993 make interesting remarks about different types of economic growth and multi-regional decision-making.
Since the late 1980's growth models have again become a popular topic in the economic literature. Especially the role of technological progress received intensive attention, in particular in the recent endogenous growth theory. Stoneman 1983 presents a nice overview about this subject. The present studies exogenous as well as endogenous growth models, with a particular emphasis on the effect different spatial background conditions may have on the welfare position of one or more regions. In our analysis, economically closed as well as open regions are considered.
Now this section aims to derive the properties of our exogenous growth model. The analysis will be conducted in two steps: first a closed multi-regional system, followed by an open multi-regional system. The result will be based on optimization theory and we will use here a Dynamic Programming (DP). DP can be applied to find the optimum in a growth model.
The multi-regional system we will consider is one of a simple kind. We neglect, for example, that regions are embodied in a larger economic structure. This structure may be a national economy or even the global economy at the final stage. Interesting in this case is the study of the "seamless world" (Brock, 1989). Take into account the structure of the economic geography......
