Population Growth As An Endogenous Factor In Indonesia's Economic Growth

Rajagukguk, Wilson (2016) Population Growth As An Endogenous Factor In Indonesia's Economic Growth. Actual Problems Economics. ISSN 1993 6788

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Abstract

This study aims to investigate whether population growth can be used as an endogenous factor of economic growth. The analysis was done by constructing a model to evaluate the interaction between the rate of population growth and the rate of economic growth employing endogenous growth theory employing the Pontryagin maximum principle. The parameter that relates population growth and economic growth is the child rearing cost. The results of the study show that the relationship between population growth and economic growth is positive when the child-rearing cost parameter is less than one (Simonian), negative when the child-rearing cost parameter is greater than one (Malthusian) and none when the child-rearing cost parameter equals to one. The growth rate of capital, consumption and output– is proportional to the rate of population growth. Parameters that reduce the steady state rate of economic and population growth are capital coefficient, child-rearing cost, rate of time preference, technology and coefficient of relative risk aversion. Based on the dynamics of capital in the Ramsey model, the golden rule will be achieved when the initial value of the vector of the ratio between consumption and capital is maintained at 0.01

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