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A New View of Economic Growth$
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Maurice FitzGerald Scott

Print publication date: 1991

Print ISBN-13: 9780198287421

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198287429.001.0001

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Growth Concepts

Growth Concepts

(p.3) 1 Growth Concepts
A New View of Economic Growth

Maurice FitzGerald Scott

Oxford University Press

In a completely static economy, expenditures would be needed to maintain and replace assets (required maintenance) and the whole of income would be consumed. When part of income is spent on making improvements, and/or when employment grows, the economy will change and grow. Typically, real wage rates will then grow, and this shift of income from capitalists to workers will cause capital to depreciate, but that will not reduce output. It is then that cumulative (gross) investment expenditures, along with employment growth over a period, explain growth in that period, and not changes in the capital stock, as generally defined. There is no role for the production function.

Keywords:   capital stock, consumption, depreciation, income, investment, production, required maintenance

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