TITLE:
The Serendipity Theorem for an Endogenous Open Economy Growth Model
AUTHORS:
Thomas Ziesemer
KEYWORDS:
Open Economy, Endogenous Growth, Human Capital, Serendipity Theorem, Ageing
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.4,
March
8,
2018
ABSTRACT: A Samuelsonian serendipity theorem for an endogenous
growth model is derived. The formula for optimal population growth rate
deviates from those of the model with exogenous population growth rates in a
third best endogenous growth model of the Lucas type with imperfect
international capital movements and human capital externalities. Calibration
shows that the effect of variation of the exogenous population growth rates on
other variables and the deviation of population growth rates from its optimal
value are small. The reason is that labour supply, interest rates and technical
change are endogenous. There is not much of an incentive for population growth
policy unless Frisch parameters change with ageing.