Cyclically Balanced Growth Paths in a Model of Economic Growth with Endogenous Policy Switching

NRU Higher School of Economics , 2015. No. 109/EC/2015.

Akhremenko A. S., Petrov A., Yureskul E.

This paper deals with a model of economic growth, which we expand to include endogenous policy switching based on retrospective voting. It is shown that under certain conditions the solution has a special form that we call a cyclically balanced growth path. This type of solution is an analogue to balanced growth paths, which often occur in growth models with constant policies. Cyclically balanced growth paths are investigated analytically, and the growth rate over the cycle has been found. Results of numerical experiments are also provided and possible empirical applications of the model are outlined

Keywords: демократия, экономический рост, эффективность, дифференциальные уравнения, economic growth, efficiency, democracy, autocracy, динамическая модель, автократия, differential equations, политическое пространство, public capital, policy space, публичный капитал, retrospective voting, ретроспективное голосование, dymanical model, growth path

Publication based on the results of: The Impact of Feedback Loops in the State-Society System on the Resource Redistribution and Economic Growth Perspectives in Democratic, Autocratic and Hybrid Regimes (2015)