Mathematica Symposium Lecture Sept 15 2008

The Mathematics of Modern Growth Theory using Mathematica

Stephen KinsellaDepartment of EconomicsKemmy Business School,University of Limerickstephen.kinsella@ul.iewww.stephenkinsella.net

Plan

What is Growth?ImportanceTheories of GrowthMathematica and Growth TheoryDemonstrations

What is Growth?

Year on Year increase in productive capacity

Measured by change in Gross Domestic Product: Output of goods and services in a

yearGrowth is

(GDP (today) - GDP (yesterday))/GDP (yesterday)

Measure is not without its problems

Robert Kennedy on GDP

“It measures everything but that which makes life

worthwhile”–Robert Kennedy

But Growth is Vital

Growth leads to increased living standards

It lifts nations out of poverty.

Robert Lucas on Growth:

“When you start to think about it, it’s very hard to think about

anything else”

Theories of Growth

Smith (1776)Malthus (1798)Von Neumann (1937)Solow (1956)Romer (1985) Neoclassical Synthesis (1980s)

Tools

RatiosGeometric/Arithmetic SeriesFix Point TheoremsODESN-ODESDynamic Programming

1970 1980 1990 2000

0

10000

20000

30000

40000

50000

1980 1990 2000

0.0

0.1

0.2

0.3

Mathematica makes obtaining and displaying economic data easy.DateListPlot[CountryData["Ireland", {{"GDPPerCapita"}, {1970, 2006}}]]

Mathematica

Growth matters.Mathematica can show students data, theory, and mathematics of growth theory.Demonstrations are the way forward.

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