constantgrowth

Constant growth refers to a concept in various fields, most notably finance and economics, describing a situation where a variable increases by a fixed percentage or amount over a consistent period. In financial modeling, particularly for dividend discount models, constant growth implies that a company's dividends are expected to increase at a steady rate indefinitely. This rate is often tied to the company's long-term expected earnings growth or the overall economic growth. The assumption of constant growth simplifies valuation by allowing for a perpetual stream of growing cash flows to be calculated using a specific formula.

In economics, constant growth can describe a scenario where an economy expands at a stable, unchanging rate year after year. This is often a theoretical ideal rather than a realistic depiction of actual economic cycles, which are typically characterized by fluctuations. The sustainability of constant growth is a subject of debate, with concerns often raised about resource depletion and environmental impact if such growth were to continue indefinitely. The term "constant growth" emphasizes predictability and uniformity in the rate of increase, distinguishing it from variable or erratic growth patterns.