Author(s)

Yong He

CERDI/CNRS, Universite Clermont-Auvergne, Clermont-Ferrand, France.

Sparked by Baumol’s revenue-versus profit-maximizing models of the firm, this note shows that if a nation seeks GDP-maximizing growth with capital expansion as driving force, the model could work only under the assumption that the consumers’ aversion to under-consumption, an unavoidable consequence of over-investment, remains constant. Otherwise, it has to decelerate growth and ultimately converges to the neoclassical growth model with consumption optimality. The empirical evidence, especially the sustainability of the Chinese model, is examined to explore the extent to which the model captures the real world.

GDP-Maximizing Growth, Aversion to Under-Consumption, Transition between Steady States, Sustainability

He, Y. (2020) A Note on GDP-versus Consumption-Maximizing Growth. Theoretical Economics Letters, 10, 909-925. doi: 10.4236/tel.2020.104054.