|
Abstract:
Growth models are surveyed, beginning with Malthus and ending with the capitalism, democracy, rule of law (CDR) model. Early models yielded changing parameters or did not explain all outcomes. The parsimonious CDR model is the first global time invariant cross-country model. It is the first to decouple exogenous entrepreneurial human capital of imagination and creativity from endogenous human and other capital stock. That is, the first to compute the value of ideas. These properties permit computation of the theoretical optimal growth rate, and demystification of the contemporary observed mature growth rate. It permits computation of the entrepreneurship elasticity of real gross domestic product (GDP). Based on the unitary elasticity, the theoretical optimal reinvestment in capital stock is validated by empirical gross fixed capital formation. The global macro-economic growth model is integrated with the micro-economic production function to form a unified economic growth theory. The final outcome is an economic growth model governed by scientific law and the placement of economic growth modeling on a sound scientific footing.
|
