Empirical interpretation of economic growth models of the United States



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This is a study of economic growth theories. This study is not a traditional approach using general treatises, but an approach utitizing a combination of mathematical economics and econometrics. In recent years the study of economic growth has become common among economists. Before the Great Depression little attention was paid to the many factors affecting the growth of national income. The Great Depression encouraged economists to give closer scrutiny to this subject. During the Second World War the analysis of national income was largely aimed at controlling the war economy in the United States. The national income concept has been considered very useful in understanding and explaining what takes place in the economy. Thus the study of economic growth has become more popular. New courses in this subject have been introduced in colleges and universities. Also, new books, institutes, and conferences in this field are continually increasing in number. The topic of economic growth is extremely broad. It nay be divided into two categories: 1) the growth involved in the shift of an economy from the stage of "underdeveloped" to the stage of "developed;" 2) the growth of the already "developed" economy. This study is confined to the second category, particularly to the growth of the national income of the United States. Due to the scarcity of data, a complete and more sophisticated analysis is a matter of difficulty. Collection of reliable statistics is tedious. Often the desirable raw material is hard to obtain. Even in the United States, income statistics on the state level do not exist. Moreover, in this study of national income accomplishment is unlikely without tedious calculation. The deeper one goes into the study, the more calculation becomes necessary. Also if a better result is to be expected, a more complicated analysis has to be undertaken. In the preparation of this study, an attempt has been made to give an empirical interpretation of economic growth models for the United States, and to bring out the consistencies or inconsistencies between reality and theories. Chapter I is an introduction to the study. The subject of Chapter II is the discussion of some major economic growth theories, which constitute the basis of this study. The method of estimation of parameters and the structure of models are explained in Chapter III. Chapter IV covers statistical results, the empirical interpretation of various arguments in economic growth. Finally, a summary and a conclusion are presented in Chapter V. The author wishes to thank Dr. Z. A. Eltezem for his guidance, patience, understanding, and encouragement in the supervision of this study. He also appreciates the valuable suggestions and time-consuming efforts of Dr. Henry C. Chen.