Suchergebnisse

IT IS ONE OF THE IRONIES OF CONTEMPORARY POLITICS THAT THE POLICY DEBATE INFLUENCED BY THE NEW GROWTH THEORY IS URGING SO LIMITED AN AGENDA OF INSTITUTIONAL AND SOCIAL REFORM IN THE PURSUIT OF ENHANCED ECONOMIC PERFORMANCE. IN SUCH A CLIMATE, IT IS OFTEN PROFESSIONALLY DIFFICULT FOR ECONOMISTS TO DISCUSS THE QUESTIONS OF POWER THAT UNDERPIN DOMINANT ORTHODOXIES ON HOW BEST TO TRIGGER ECONOMIC GROWTH. THIS ARTICLE OFFERS A FULL BRIEFING ON THE RANGE OF ECONOMIC THEORIES EMBODIED IN (OR EXCLUDED BY) THOSE ORTHODOXIES.

In theoretical settings, growth rates are generally based on derivatives, which relate infinitesimal changes in time to changes in a variable's value. In applications of theory, growth occurs over discrete intervals, and a variety of discrete growth measures exist. Therefore, a key question is which discrete measure provides estimates most consistent with true parameter values. In estimating elasticity values, results show that the standard growth rate can be highly inaccurate. The average-base and logarithmic growth rates do a much better job. In addition, when the process generating data is unknown, a linear in growth rates regression equation is found to be more accurate than the widely used linear, logarithmic, logarithmic-linear, and linear-logarithmic specifications.

This article identifies serious weaknesses in various commonly used methods of measuring "average" growth rates over several time periods. An alternative method is proposed which satisfies two essential criteria: firstly it smoothes the data to remove "exceptional variation" in the time series, and secondly, it incorporates a compounding process which, it is suggested, is an essential requirement of a "correct" average growth rate.