The Dynamics of Growth Slowdown in Developed Economies

Abstract

Numerous studies have explored the dynamics and long-term effects of economic growth both theoretically and empirically. In this study, we examine the endogenous sources of economic growth and try to answer why the long-run growth rates of advanced economies have experienced secular slowdowns over the last decades. Additionally, we focus on the U.S. economy, for which we build a complex dynamic general equilibrium model to simulate and project the trajectory of its primary economic fundamentals over the long term. Our principal findings exhibit a consistent alignment with empirical data, indicating a growth slowdown in developed economies. Furthermore, according to these outcomes, our analysis suggests that the U.S. economy will experience a slowdown in the long run, establishing a new trend of GDP per capita growth rate of 1.5 per annum.