A STYLIZED SIMULATION MINIMODEL OF ECONOMIC GROWTH
The paper presents a stylized simulation mini-model of economic growth. It can be regarded a mini-replica of large (more than 200 equations) long-term macroeconometric model W8D-2002 of the Polish economy. Its parameters are calibrated being based either on results of estimation of parameters of particular equations or on statistical data from the base year 2000. The model generates, on the one hand the potential GDP. Its rate of growth is related to the gross investment in real capital/GDP share as well as to investment in knowledge capital represented by the R&D and educational expenditures /GDP shares. The latter represent the impact of TFP increase on economic growth. The education expenditures adjusted for the increase of expenditures on university education are transformed into the investment in human capital. They enter the extended Cobb-Douglas production function.The empirical counterpart shows the likely paths of growth of the potential of the Polish economy, assuming correlated changes in the above production factors. In the horizon of 20 years the investment shares are moved upwards yielding rising rates of growth of potential GDP. The mini-model generates, on the other hand, following the Harrod-Domar tradition - the effective GDP. The growth of final domestic demand depends on investment in fixed capital growth rates deducted from assumed investment/GDP shares. In extended version of the model the total investment is defined including also investment in R&D and human capital. The consumption is obtained using simple multiplier. The second important variable is exports, which rates of growth are exogenous, wheares imports are endogenously determined. Empirical part shows the results of calculations of effective GDP, given the assumed shares of investment in GDP and a spectrum of exports rates of growth. It makes it possible to show under which rates of growth of exports the rates of potential and effective GDP coincide. It allows also to find the rates of export growth that make possible to respectively decline the initial output gap.
- W. Welfe, Uniwersytet Lodzki, Wydzial Ekonomiczno-Socjologiczny, Instytut Ekonometrii i Statystyki, Katedra Modeli i Prognoz Ekonometrycznych, ul. Rewolucji 1905r. 41, 90-214 Lodz, Poland
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