Dresden 2003 – scientific programme

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AKSOE: Physik sozio-ökonomischer Systeme

AKSOE 5: Makro-ökonomische Modelle und Wirtschaftswachstum I

AKSOE 5.2: Talk

Tuesday, March 25, 2003, 14:30–15:00, BAR/205

Economic Growth in the Structural Dynamic Economic Model (SDEM) — •Volker Barth — Max-Planck-Institut für Meteorologie, Hamburg — Forschungsgruppe GELENA, Universität Oldenburg

The Structural Dynamic Economic Model (SDEM) describes growth as the consequence of profit-driven productivity increase. Entrepreneurs invest to enhance productivity, this generates profits that decay subsequently due to factor cost increases. Persistently growing profits require persistently growing productivity. Economic growth is achieved when part of the profits is invested to enlarge the capital stock.

Productivity also defines the ratio of capital and labour and thus determines employment. Due to the assumed fixed proportions production function, the model is very sensitive to changes in the dynamic parameters. This sensitivity can be substantially reduced by introducing social feedback mechanisms, e.g. a wage rate that depends on the employment rate.