2015/07/17 by Ali Hosseiny, Hosseiny, Ali
Economics, Econometrics and Finance · #Economic theories and models #FOS: Economics and business #FOS: Physical sciences #General Finance (q-fin.GN) #Physics and Society (physics.soc-ph)
paper · pdf · doi:10.48550/arxiv.1507.04848
openalex publication_date 2015/07/17 · openalex created_date 2022/10/02 · openalex updated_date 2026/07/28
The aim here is to address the origins of sustainability for the real growth\nrate in the United States. For over a century of observations on the real GDP\nper capita of the United States a sustainable two percent growth rate has been\nobserved. To find an explanation for this observation I consider the impact of\nutility preferences and the effect of mobility of labor & capital on every\nprovided measurement. Mobility of labor results in heterogenous rates of\nincrease in prices which is called Baumol's cost disease phenomenon.\nHeterogeneous rates of inflation then make it impossible to define an invariant\nmeasure for the real growth rate. Paradoxical and ambiguous results already\nhave been observed when different measurements provided by the World Bank have\nbeen compared with the ones from the systems of national accounts (SNA). Such\nambiguity is currently being discussed in economy. I define a toy model for\ncaring out measurements in order to state that this ambiguity can be very\nsignificant. I provide examples in which GDP expands 5 folds while measurements\npercept an expansion around 2 folds. Violation of invariance of the\nmeasurements leads to state that it is hard to compare the growth rate of GDP\nfor a smooth growing country such as the U.S. with a fast growing country such\nas China. Besides, I state that to extrapolate the time that economy of China\npasses the economy of the US we need to consider local metric of the central\nbanks of both countries. Finally I conclude that it is our method of\nmeasurements that leads us to percept the sustainable growth rate.\n