Stylized facts of economic growth
Nicholas Kaldor summarized the statistical properties of long-term economic growth in an influential 1957 paper. He pointed out the 6 following 'remarkable historical constancies revealed by recent empirical investigations':
- The shares of national income received by labor and capital are roughly constant over long periods of time
- The rate of growth of the capital stock per worker is roughly constant over long periods of time
- The rate of growth of output per worker is roughly constant over long periods of time
- The capital/output ratio is roughly constant over long periods of time
- The rate of return on investment is roughly constant over long periods of time
- The real wage grows over time
Kaldor did not claim that any of these quantities would be constant at all times; on the contrary, growth rates and income shares fluctuate strongly over the business cycle. Instead, his claim was that these quantities tend to be constant when averaging the data over long periods of time. His broad generalizations, which were initially derived from U.S. and U.K. data, but were later found to be true for many other countries as well, came to be known as 'stylized facts'.
These may be summarized and related as follows:
- Output per worker grows at a roughly constant rate that does not diminish over time.
- Capital per worker grows over time.
- The capital/output ratio is roughly constant. (1+2)
- The rate of return to capital is constant.
- The share of capital and labor in net income are nearly constant.
- Real wage grows over time. (2+4+5)
- Nicholas Kaldor (1957), 'A model of economic growth.' The Economic Journal 67 (268), pp. 591-624.
- Capital Accumulation and Economic Growth, 1961, in Lutz, editor, Theory of Capital
- Allen, R.G.D.: Macro-Economic Theory : A Mathematical Treatment. - London, Melbourne, Toronto: Macmillan, 1968.
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