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You also can view and down load .PDF versions of my Published Papers (from 1999 onwards).
Working
Papers of John J. Seater
The following papers are available in .pdf
format (Adobe Acrobat Reader). Click
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the title to view or download the paper.
"Factor-Eliminating
Technical Change"
Pietro Peretto and John J. Seater.
Revised June 2008
ABSTRACT
Endogenous growth
requires that non-reproducible factors of production be either
augmented or eliminated. Attention heretofore has focused almost
exclusively on augmentation. In this paper, we study factor
elimination. We present a theory of how maximizing agents decide when
to reduce the importance of non-reproducible factors and what amount of
resources to expend in doing so. For simplicity and clarity, there is
no augmenting progress of any kind, thus excluding the standard engine
of growth. We use a Cobb-Douglas production function with two factors
of production, one reproducible and one not. By spending resources on
R&D, agents learn to change the exponents of the production
function. We obtain not only the economy's asymptotic behavior but also
its complete transition dynamics. The economy starts with no capital
and no knowledge of how to use it. Such a technology by itself cannot
support growth. However, by conducting R&D, agents learn new
technologies that use capital, which they then build. Growth occurs
along the transition path. Asymptotically, however, growth may be
bounded away from zero or may die out. The first outcome is an
endogenous growth model, and the second is a standard Solow model that
has no sources of growth. Which asymptotic outcome is achieved depends
on the parameters governing saving and production, but there always is
a feasible saving rate sufficiently high to give the perpetual growth
outcome. The theory provides an endogenous mechanism for the transition
from an initial production technology incapable of supporting perpetual
growth to one that is capable of doing so, that is, from a technology
with diminishing returns to the reproducible factors of production to
one with constant returns to those factors. In contrast to virtually
all other growth models, the origin is not a steady state. An economy
that starts with pure primitive production becomes industrialized
through its own efforts. Furthermore, the theory is not subject to the
linearity (or singularity) critique. Linearity of the growth process is
a necessary condition for perpetual growth. In our theory the economy
initially can (and indeed does) fail to satisfy any such condition
initially but nonetheless attains it endogenously through the kind of
technical progress we study. The theory thus offers a purely endogenous
explanation for the transition from a primitive economy to one that is
developed and perpetually growing. The theory makes strong predictions
on the relation between factor intensities and income per person. The
data are consistent with those predictions.
Revised August
2008
ABSTRACT
We introduce a new
measure of the extent of federal regulation in the U.S. and use it to
investigate the relationship between federal regulation and
macroeconomic performance. We find that regulation has
statistically and economically significant effects on aggregate output
and the factors that produce it–total factor productivity (TFP),
physical capital, and labor. Regulation has caused substantial
reductions in the growth rates of both output and TFP and has had
effects on the trends in capital and labor that vary over time in both
sign and magnitude. Regulation also affects deviations about the
trends in output and its factors of production, and the effects differ
across dependent variables. Regulation changes the way output is
produced by changing the mix of inputs. Changes in regulation and
marginal tax rates offer a straightforward explanation for the
productivity slowdown of the 1970s.
Keywords: Regulation; macroeconomic
performance
JEL classification: L50; O40
"The Sensitivity of Consumption to
Income Innovations: Evidence from Canadian Provinces." Joseph P. DeJuan and John J. Seater.
Revised April 2008
ABSTRACT
This
paper utilizes relatively unexplored Canadian provincial-level data to
investigate an old but still relevant question in macroeconomics
as to whether consumption responds to income innovations in a manner
consistent with the stochastic implications of the permanent income
hypothesis (PIH). The empirical results obtained do not appear to be in
accord with the PIH. Instead consumption’s response to income
innovations are found to be much weaker than the PIH predicts; in
particular, the response displays an asymmetric pattern in the sense
that it is much stronger for negative than positive income innovations.
We interpret this evidence of asymmetry as being consistent with the
presence of liquidity constraints in provincial households.
JEL Classification: E21
Keywords: Consumption, Permanent
Income, Canadian provinces
Revised
January
2008
ABSTRACT
Trade is shown to affect economic growth
purely through comparative advantage. Unlike previous literature,
this growth effect does not depend on the presence of scale effects,
technology transfer, research and development, or even international
investment, all of which are excluded by construction. Trade
never reduces growth, but whether trade raises a country’s growth rate
or leaves it unchanged depends on whether a balanced world growth rate
exists, which in turn depends on the pattern of both comparative and
absolute advantage. When a world balanced growth rate exists,
trade always raises the growth rate of both trading partners.
Otherwise, either one partner's growth rate is increased and the other
is unaffected or neither partner's growth rate is affected, depending
on the comparative and absolute advantage patterns. Trade
therefore does not necessarily guarantee a stable world income
distribution, contrary to some results in the literature. Trade's
effect on the growth rate of a country's output depends on the type of
good imported but not the type exported. In all cases, the effect
of trade on a home country’s growth rate is the same as if that country
had learned the technology used by its trading partner to produce the
good that the home country imports.
You also can view and down load .PDF versions of my Published Papers (from 1999 onwards).
Return to John Seater's Home Page