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The Transition to Market Economies in an Endogenous Growth Model with Altruistic Agents
Author(s) -
Zhang Jie
Publication year - 1999
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00138
Subject(s) - economics , per capita , endogenous growth theory , consumption (sociology) , production (economics) , fertility , capital (architecture) , transition (genetics) , market economy , economy , microeconomics , human capital , population , biochemistry , chemistry , gene , social science , demography , archaeology , sociology , history
This paper considers an endogenous transition from a self‐sufficient traditional economy to a market economy and its consequences on fertility and growth. The transition can occur if private intergenerational transfers are unable to secure old‐age consumption as adequately as savings on capital markets; otherwise individuals stay in the traditional economy unless the mass‐production technology in the market economy is sufficiently more advanced than individually accessible technologies. Markets emerge only if per capita output exceeds a certain level given a fixed cost of forming markets. The transition reduces fertility and promotes growth under plausible restrictions. JEL Classification : E 20; J 13; O 10