International Journal of Finance and Banking Research

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Behavior of the U.S. Economic Growth: An Empirical Analysis

Received: 20 January 2018    Accepted: 22 May 2018    Published: 03 July 2018
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Abstract

The purpose of this paper is to measure behavior of the U.S. economic growth and views the future from 2015-2035 while pretending that the financial crisis did not happen. The sample period for investigation in 1945-2015 the empirical analysis of this study employed annual secondary time series data, collected from different sources. Three influential factors of growth are the labor force, technology, and capital, and our most important finding is that growth of technology is the highest influential among them and thus special attention should be given its advancement. The growth rate of GDP is at 2.07% as of 2015, but using the first order exponential model, it will slow down to 1.38% by 2035. The findings were conclusive in that total production was made up of 57.5% technology, 28.8% labor, and 12.8% capital. Technology makes up the greatest fraction of total production and changes in labor and capital would not affect the growth rate as much as technology can and it was projected that in 20 years, the GDP level could be anywhere from $19,138.8 using the polynomial model to $34,681.8 using the first order exponential model. The longest business cycle the U.S. has experienced was from 1989-2008, under which the economy had its longest stretch of better than experience performance. Growth gradually accelerated after 1950, reached a peak in the middle of the 20th century, and has been slowing down since. The most effective way to increase the growth rate is to increase the level of technology because the diminishing returns to labor and capital decrease the growth rate of GDP. A key idea to take away from this paper is that while a model fit the current data well, it may weigh recent events to heavily, recessionary or exponential growth, the average between the most optimistic and pessimistic models may be the best bet.

DOI 10.11648/j.ijfbr.20180402.11
Published in International Journal of Finance and Banking Research (Volume 4, Issue 2, April 2018)
Page(s) 25-39
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Economic Growth, Technology, Polynomial Model, Productivity, Exponential Model, Linear Model

References
[1] Gordon, R. (2012). Is U.S. Economis Growth over? Falterring innovation confronts. National Bureau of economic research, 1-25.
[2] Charles, J. I. (2002). Sources of U.S. Economic Growth in a World of Ideas. American Economic Review, 220-239.
[3] Chowdhury, M. N., Uddin, M. J., & Islam, M. S. (2014). An econometric analysis of the determinants of foreign exchnge reserve in Bangladesh.. Journal of World Economic Research, 72-82.
[4] Corrado, C., Charles, R., & Daniel, E. (2006). Intangible Capital and Economic Growth. Staff working papers in the Finance and Economics Discussion Series (FEDS).
[5] Corrado, C., Hulten, C., & Sichel, D. (2009). Intangiable Capital and U.S. Economic growth. Review of Income and Weath, 55.
[6] Jorgenson, D. (1099). Productivity and Postwar U.S. Economic Growth. Journal of Economic Perspective, 2 (4), 23-41.
[7] Jorgenson, D. W., & Fraumeni, B. (1992). Investment in Education and U.S. Economic Growth. The Scandinavian Journal of Economics, 51-70.
[8] Jorgenson, D., & Stirion, K. (2000). Raising the Speed Limit: U.S. Economic Growth in the Information Age. Brookings Paper on Economic Activity, 2000 (1), 125-235.
[9] Jorgerson, D., Gollop, F., & Fraumeni, B. (1991). Productivity and U.S. Economic Growth. Elsevier Science Publisher.
[10] Uddin, M., Chowdhury, N. M., & Ahmed, M. (2015). Impact of ADP on GDP in Bangladesh: A Cointegration Approach. International Journal of Econometrics anc Financial Management, 3 (2), 44-56.
Author Information
  • Department of Economics, University of Nevada Reno, Reno, USA

  • Department of Economics and Banking, International Islamic University Chittagong, Chittagong, Bangladesh

  • Department of Economics and Banking, International Islamic University Chittagong, Chittagong, Bangladesh

  • Department of Economics and Banking, International Islamic University Chittagong, Chittagong, Bangladesh

Cite This Article
  • APA Style

    Md Niaz Murshed Chowdhury, Sharmina Khanom, Mahamuda Firoj, Shamima Nasrin Emu. (2018). Behavior of the U.S. Economic Growth: An Empirical Analysis. International Journal of Finance and Banking Research, 4(2), 25-39. https://doi.org/10.11648/j.ijfbr.20180402.11

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    ACS Style

    Md Niaz Murshed Chowdhury; Sharmina Khanom; Mahamuda Firoj; Shamima Nasrin Emu. Behavior of the U.S. Economic Growth: An Empirical Analysis. Int. J. Finance Bank. Res. 2018, 4(2), 25-39. doi: 10.11648/j.ijfbr.20180402.11

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    AMA Style

    Md Niaz Murshed Chowdhury, Sharmina Khanom, Mahamuda Firoj, Shamima Nasrin Emu. Behavior of the U.S. Economic Growth: An Empirical Analysis. Int J Finance Bank Res. 2018;4(2):25-39. doi: 10.11648/j.ijfbr.20180402.11

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  • @article{10.11648/j.ijfbr.20180402.11,
      author = {Md Niaz Murshed Chowdhury and Sharmina Khanom and Mahamuda Firoj and Shamima Nasrin Emu},
      title = {Behavior of the U.S. Economic Growth: An Empirical Analysis},
      journal = {International Journal of Finance and Banking Research},
      volume = {4},
      number = {2},
      pages = {25-39},
      doi = {10.11648/j.ijfbr.20180402.11},
      url = {https://doi.org/10.11648/j.ijfbr.20180402.11},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijfbr.20180402.11},
      abstract = {The purpose of this paper is to measure behavior of the U.S. economic growth and views the future from 2015-2035 while pretending that the financial crisis did not happen. The sample period for investigation in 1945-2015 the empirical analysis of this study employed annual secondary time series data, collected from different sources. Three influential factors of growth are the labor force, technology, and capital, and our most important finding is that growth of technology is the highest influential among them and thus special attention should be given its advancement. The growth rate of GDP is at 2.07% as of 2015, but using the first order exponential model, it will slow down to 1.38% by 2035. The findings were conclusive in that total production was made up of 57.5% technology, 28.8% labor, and 12.8% capital. Technology makes up the greatest fraction of total production and changes in labor and capital would not affect the growth rate as much as technology can and it was projected that in 20 years, the GDP level could be anywhere from $19,138.8 using the polynomial model to $34,681.8 using the first order exponential model. The longest business cycle the U.S. has experienced was from 1989-2008, under which the economy had its longest stretch of better than experience performance. Growth gradually accelerated after 1950, reached a peak in the middle of the 20th century, and has been slowing down since. The most effective way to increase the growth rate is to increase the level of technology because the diminishing returns to labor and capital decrease the growth rate of GDP. A key idea to take away from this paper is that while a model fit the current data well, it may weigh recent events to heavily, recessionary or exponential growth, the average between the most optimistic and pessimistic models may be the best bet.},
     year = {2018}
    }
    

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  • TY  - JOUR
    T1  - Behavior of the U.S. Economic Growth: An Empirical Analysis
    AU  - Md Niaz Murshed Chowdhury
    AU  - Sharmina Khanom
    AU  - Mahamuda Firoj
    AU  - Shamima Nasrin Emu
    Y1  - 2018/07/03
    PY  - 2018
    N1  - https://doi.org/10.11648/j.ijfbr.20180402.11
    DO  - 10.11648/j.ijfbr.20180402.11
    T2  - International Journal of Finance and Banking Research
    JF  - International Journal of Finance and Banking Research
    JO  - International Journal of Finance and Banking Research
    SP  - 25
    EP  - 39
    PB  - Science Publishing Group
    SN  - 2472-2278
    UR  - https://doi.org/10.11648/j.ijfbr.20180402.11
    AB  - The purpose of this paper is to measure behavior of the U.S. economic growth and views the future from 2015-2035 while pretending that the financial crisis did not happen. The sample period for investigation in 1945-2015 the empirical analysis of this study employed annual secondary time series data, collected from different sources. Three influential factors of growth are the labor force, technology, and capital, and our most important finding is that growth of technology is the highest influential among them and thus special attention should be given its advancement. The growth rate of GDP is at 2.07% as of 2015, but using the first order exponential model, it will slow down to 1.38% by 2035. The findings were conclusive in that total production was made up of 57.5% technology, 28.8% labor, and 12.8% capital. Technology makes up the greatest fraction of total production and changes in labor and capital would not affect the growth rate as much as technology can and it was projected that in 20 years, the GDP level could be anywhere from $19,138.8 using the polynomial model to $34,681.8 using the first order exponential model. The longest business cycle the U.S. has experienced was from 1989-2008, under which the economy had its longest stretch of better than experience performance. Growth gradually accelerated after 1950, reached a peak in the middle of the 20th century, and has been slowing down since. The most effective way to increase the growth rate is to increase the level of technology because the diminishing returns to labor and capital decrease the growth rate of GDP. A key idea to take away from this paper is that while a model fit the current data well, it may weigh recent events to heavily, recessionary or exponential growth, the average between the most optimistic and pessimistic models may be the best bet.
    VL  - 4
    IS  - 2
    ER  - 

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