In my paper, I intended to show and explain the model with an expanding variety of products. Then I further expanded it to set it into an environment, where there is a flow of good between countries. In the end, I took the main findings from the base model and simulated them in Matlab. I then found real-life data online and inserted it in the findings. Through this whole process, I tried to show that there is catch-up between countries as well as to prove the existence of steady-state growth and that countries are actually converging towards it.
In the first, theoretical, part of my paper, it was evident that there are many variables, that have an influence on economic growth. The main variables that I paid special attention to in my simulation, are labour input, investment in research and development and the number of varieties of goods on the market. On top of that, I looked into the effects of the labour to capital ratio on growth.
At the end of the theoretical part, I got two main results: growth rate of the economy and the gowth rate of consumption. During the this part, many restrictions appeared, that have to be taken into account, if the model is to be correct.
In the simulation part of my paper, I was successful in proving that, in real life, as well as in the model, there is catch-up between developed and developing countries. I also managed to show that both types of countries are converging to a steady state and a steady state growth.
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