The thirteenth session of the Faculty Working Paper Series-2019
“The study explains the dynamics in the Optimal Growth and Overlapping Generations models and their implications for (real) GDP per capita [RGDPPC] in different countries in the short-run and long-run. This analysis uses RGDPPCs for ten countries consisting of five per each developed and developing category for 116 years. Sri Lanka was used as the favourite destination and calculated the RGDPPC ratios. Data on RGDPPC for ten countries explain that the relative differences between RGDPPC ratios and the baseline have been varying over time. Also, it demonstrates a high variation in the short-run dynamics between countries. Both models predict a convergence of economies into a steady-state having the same amount of RGDPPCs in the long run. This prediction appears to be acceptable in the analysis. Also, the concept of efficient contributions by generations in the OGE model was concerned and it reflected more realistic reasoning but resulted to make differences across countries’ per capita GDP in the long run. The long-run dynamics revealed that growing inequality is a common issue in developing nations as a very low percentage of populations enjoys a high proportion of national output”.
