The Theory of Efficient Growth

Van, Germinal G. (2022): The Theory of Efficient Growth.

Abstract

The main objective of this paper is to propose an analytical framework to examine the foundations of the theory of efficient growth. The theory of efficient growth is a newly developed theory based on the principles of the neoclassical framework. It argues that an economy grows efficiently under two conditions. First, that the public and the private sectors both perform independently from each other. Second, the sum of their independent performances reaches an equilibrium. This equilibrium determines the optimum point of economic growth, and this optimal point illustrates the efficiency of economic growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economic Growth, Mathematical Economics, Economic Theory, Macroeconomics, Business Cycle, Fiscal Policy
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C60 - General; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E13 - Neoclassical; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy

References

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3. Equation (3), P (t) = X, Q (t) = 0.

4. Huntley, Jonathan. “The Long-Run Effects of Federal Budget Deficits on National Saving and Private Domestic Investment.” Working Paper Series. Working Paper 2014-02. (2014). Congressional Budget Office. pp. 1-9

5. Auerbach, Alan J.; Gale, William G. “Perspective on Budget Surplus.” National Tax Journal. Vol. 53, No. 3. (2000). pp. 459-472

6. Ibid. p. 460

7. Ibid. p. 461

8. Alesina, Alberto. “The Political Economy of the Budget Surplus in the United States.” Journal of Economic Perspectives. Volume 14, Number 3. (2000). pp. 3-19

9. Ibid. p. 5

10. For Equation (6), P(t) = X and Q(t) = T