mathematica symposium lecture sept 15 2008

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The Mathematics of Modern Growth Theory using Mathematica Stephen Kinsella Department of Economics Kemmy Business School, University of Limerick [email protected] www.stephenkinsella.net

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Page 1: Mathematica Symposium Lecture Sept 15 2008

The Mathematics of Modern Growth Theory using Mathematica

Stephen KinsellaDepartment of EconomicsKemmy Business School,University of [email protected]

Page 2: Mathematica Symposium Lecture Sept 15 2008

Plan

What is Growth?ImportanceTheories of GrowthMathematica and Growth TheoryDemonstrations

Page 3: Mathematica Symposium Lecture Sept 15 2008

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)

Page 4: Mathematica Symposium Lecture Sept 15 2008

Measure is not without its problems

Robert Kennedy on GDP

Page 5: Mathematica Symposium Lecture Sept 15 2008

“It measures everything but that which makes life

worthwhile”–Robert Kennedy

Page 6: Mathematica Symposium Lecture Sept 15 2008

But Growth is Vital

Page 7: Mathematica Symposium Lecture Sept 15 2008

Growth leads to increased living standards

It lifts nations out of poverty.

Page 8: Mathematica Symposium Lecture Sept 15 2008

Robert Lucas on Growth:

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

anything else”

Page 9: Mathematica Symposium Lecture Sept 15 2008

Theories of Growth

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

Page 10: Mathematica Symposium Lecture Sept 15 2008

Tools

RatiosGeometric/Arithmetic SeriesFix Point TheoremsODESN-ODESDynamic Programming

Page 11: Mathematica Symposium Lecture Sept 15 2008

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}}]]

Page 12: Mathematica Symposium Lecture Sept 15 2008

Mathematica

Page 13: Mathematica Symposium Lecture Sept 15 2008

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

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