Français

Le modèle de Solow est construit sur la base de plusieurs hypothèses simplificatrices qui viennent pour la plupart de la théorie néoclassique. Il considère un monde à un seul bien et un seul agent (la « communauté »), ne connaissant ni chômage, ni dysfonctionnements. Dans ce monde, la production ne dépend que de deux facteurs, le travail et le capital. Les autres hypothèses sont la flexibilité des facteurs de production (alors que dans le modèle de Harrod-Domar, ceux-ci étaient fixés), les rendement décroissants, les rendements d’échelle constants et le réinvestissement de toute l’épargne.
Dans le modèle de Solow, l’augmentation des facteurs de production (travail et capital) explique une part de la croissance. C’est donc parce qu’il y a une augmentation de la population (facteur travail) et des investissements (facteur capital), qu’il y a de la croissance. Toutefois, la plus grande part de la croissance n’est pas expliquée par ces deux facteurs, mais est due à un « facteur résiduel ». Il s’agit du progrès technique, dont on ne connaît pas vraiment l’origine (certains disent que c’est un facteur « tombé du ciel »). Les causes de la croissance (augmentation de la population et progrès technique) sont donc exogènes: le modèle n’explique pas leur origine.

La hausse des quantités de travail et de capital permet d’augmenter la production par tête dans le long terme. Non, en raison des rendements décroissants.

Le progrès technique est l’une des sources de la croissance économique à long terme.
Oui, grâce au progrès technique, on peut lutter contre les rendements décroissants.
Le progrès technique s’explique par la croissance. Non, il est exogène.

La croissance économique s’explique par trois facteurs : la hausse du capital, l’augmentation de la main-d’oeuvre et un facteur résiduel, qui est exogène à savoir le progrès technique. Ce dernier est le facteur principal de la croissance. Oui.
Les études empiriques menées confirment la théorie de R. Solow.
Oui, voir le rôle de la PGF (productivité globale des facteurs) dans la croissance.

En raison des rendements décroissants des facteurs de production, les économies vont atteindre un point où toute augmentation des facteurs de production n’engendrera plus d’augmentation de la production par tête. Ce point correspond à l’état stationnaire. Solow note toutefois que cette troisième prédiction est irréaliste : en fait, en fait, les économies n’atteignent jamais ce stade, en raison du progrès technique qui accroît la productivité des facteurs.
Autrement dit, pour Solow, sur le long terme, la croissance provient du progrès technique. Toutefois, ce progrès technique est exogène au modèle, c’est-à-dire qu’il ne l’explique pas mais le considère comme donné (telle une « manne tombée du ciel »).

English

Solow’s model is built on the basis of several simplifying assumptions that mostly come from neoclassical theory. He considers a world with a single good and a single agent (the “community”), knowing neither unemployment nor dysfunctions. In this world, production depends on only two factors, labor and capital. The other assumptions are the flexibility of the factors of production (whereas in the Harrod-Domar model these were fixed), diminishing returns, constant returns to scale and the reinvestment of all savings.
In the Solow model, the increase in factors of production (labour and capital) explains part of the growth. It is therefore because there is an increase in the population (labour factor) and investments (capital factor), that there is growth. However, most of the growth is not explained by these two factors, but is due to a “residual factor”. This is technical progress, the origin of which is not really known (some say that it is a factor “fallen from the sky”). The causes of growth (population increase and technical progress) are therefore exogenous: the model does not explain their origin.

The increase in the quantities of labor and capital makes it possible to increase production per capita in the long term. No, due to diminishing returns.

Technical progress is one of the sources of long-term economic growth.
Yes, thanks to technical progress, we can fight against diminishing returns.
Technical progress is driven by growth. No, he is exogenous.

Economic growth is explained by three factors: the increase in capital, the increase in labor and a residual factor, which is exogenous, namely technical progress. The latter is the main factor of growth. Yes.
The empirical studies carried out confirm the theory of R. Solow.
Yes, see the role of TFP (total factor productivity) in growth.

Due to diminishing returns to factors of production, economies will reach a point where any increase in factors of production will no longer result in an increase in output per capita. This point corresponds to the stationary state. Solow notes, however, that this third prediction is unrealistic: in fact, in fact, economies never reach this stage, due to technical progress that increases factor productivity.
In other words, for Solow, in the long term, growth comes from technical progress. However, this technical progress is exogenous to the model, that is to say that it does not explain it but considers it as given (like a « manna fallen from the sky »).

Si vous choisissez l’épreuve de dissertation, après une bonne réflexion, il sera d’une importance cruciale de commencer par l’analyse du sujet. Voir vidéo ci-dessous.

Last update: 3/10/2022

Last Updated: September 15, 2022 at 14:13 PM

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Foreign exchange market

Let’s start by recalling that the foreign exchange market is the place where currencies are exchanged and exchange rates are determined according to the supply and demand of foreign currencies against national currencies.

Macroeconomic topics

Migrant remittances are one of the other international private capital flows such as foreign direct investment (FDI), and foreign portfolio investment (FPI).

Why do migrants remit?

For an overview of why migrants in the UK send money, refer to the graph (for 2015-2016). It can be seen that the motives of migrants sending money to support family or friends represent 26.6%. This is by far the highest proportion.
To have a lock at the reasons for remetting Go to…

However, one must remember that migrants rightly complain about the cut taken by banks and money transfer firms. The chart shows, as a % of the amounts of money sent, the involved costs.

Look at the Chart…

Exchange rates are amongst the most dealt with macroeconomic topics in economics whether it’s about fixed or flexible exchange regimes.

Migrant remittances

According to the World Bank’s latest briefing, Washington, DC, May 11, 2022 « the World Bank said today that it expects officially recorded remittance flows to low- and middle-income countries to increase 4.2% this year to reach $630 billion, following a record recovery. Approximately 8.6% in 2021. This came in the latest World Bank Migration and Development Briefing released today. » Go to World Bank site.

Exchange rates and remittances

In this article, we focus on a topic related to how international remittances, from the host countries of migrants to their countries of origin, respond to movements in nominal rather than real exchange rates.
Nominal exchange rate

According to the International Monetary Fund (IMF) « Nominal exchange rate (is) the price of one currency against another. It is usually expressed in the domestic rate of the foreign currency. So if buying one euro (the base currency) costs the holder of the US dollar (the counter currency) 1.36 dollars* (1€=$1.36 US), the nominal rate from the euro holder’s perspective is 0.735 (1/1.3 US dollars = 0.735 euros: or US$1 = €0.735). »
*1 euro = 1.36 US dollars and 1 US dollar = 0735 euro. Go to IMF site.

How variables are associated

The results of changes in exchange rates, that is increase or decrease, can be viewed from two points of view. Let us examine one of them, i.e. how many units of the national currency can be obtained for one unit of foreign currency. Senders are interested in the currency of the country in which they live. Therefore, if a unit of foreign currency buys more units of the currency of the sender’s country (national currency), then this means that the foreign currency is experiencing an increase in its exchange rate against the currency of the sender’s country, which benefits the sender.
India is expected to be the first country to receive remittances in 2022. It is worth noting that contrary to the popular belief that is transmitted and supported by the media, among the countries whose immigrant nationals send money home, we find developed countries such as Germany and France. See the Chart.

It can be assumed that changes in remittance amounts are related to changes in exchange rates. Thus, if the currency of the country of immigrants decreases in value compared to the currency of the country in which the immigrants reside, remittances increase. Of course, there are other factors that influence these conversions.

Some studies covering a sample of Asian countries (econometric studies) report that remittances lead to a depreciation of the exchange rate. It is also considered that the exchange rate may rise significantly if transfers are used for savings, especially under flexible exchange rate regimes.

Exchange rates trends

There is a rise in the value of the US dollar (the dirham depreciates) during the period. Migrants are likely to increase their remittances back to their countries of origin. As of 2021, there is an upward trend in the US dollar as seen on the chart [Choose the evolution over 5 years (5a or 5Y)].
US$/Moroccan dirham exchange rate.

We can also observe the trend of depreciation of the Egyptian pound against the US dollar at the beginning of 2022. This trend is a source of concern and controversy at the moment in Egypt.

Chart Source

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You can find out more about Exchange rate changes here in French.