Endogenous Growth Cycles

This paper uses a variety expansion growth model to show that an economy with a time lag between innovation and widespread use of the new product can experience growth cycles. By allowing the diffusion of innovation, the economy can exhibit period-by-period indeterminacy of expectations. If agents expect that high investment and rapid growth will take place in the future, the economy actually grows faster, and if not, the economy grows slowly.     

Endogenous Growth Cycles in Continuous Time

The endogenous dynamics of a closed constant returns multi-market economy are examined in which agents face downward sloping demand. The trigger for growth in this model is a technological change that warrants costly adjustment in input quantities by agents. In the resulting dynamic game, relative prices within markets remain constant. Consequently, all own price elasticities are constant. In markets characterized by lower cost of capital the unique outcome is collusion in which agents do not incur adjustment cost and there is no adoption of new technology. But in other markets a unique non-cooperative equilibrium exists in which agents do incur the cost of adopting the new technology. Only three specifications of adjustment costs are feasible. Output increases along an S-shaped time path with or without a non-explosive cyclical component.     

Endogenous Cycles and Growth with Indivisible Technological Developments

When large, discrete technological improvements require the accumulation of research or infrastructural investment over time, growth paths display cyclical patterns even in the absence of any shocks. Particularly interesting equilibrium features of these cycles include declines in output and asymmetries in the cyclic patterns displayed during expansions and recessions.Journal of Economic LiteratureClassification Numbers: E22, E32, O41.     

Income Tax and Endogenous Business Cycles

This paper investigates the dynamic implication of balanced–budget rules. We introduce public goods to an overlapping generations model with production and assume that public goods in each period are financed by the labor income taxes. We show that in our model, if the cost of providing public goods is financed by lump–sum taxes, endogenous fluctuations would never occur. But in cases where the government adopts proportional taxes, periodic and chaotic equilibria can exist.     

Growth Cycles and Market Crashes

Market booms are often followed by dramatic falls. To explain this requires an asymmetry in the underlying shocks. A straightforward model of technological progress generates asymmetries that are also the source of growth cycles. Assuming a representative consumer, we show that the stock market generally rises, punctuated by occasional dramatic falls. With high risk aversion, bad news causes dramatic increases in prices. Bad news does not correspond to a contraction of existing production possibilities, but to a slowdown in its expansion. This economy provides a model of endogenous growth cycles in which recoveries and recessions are dictated by the adoption of innovations. Journal of Economic Literature Classification Numbers: O40, G12, O41, O30.     

Human Capital and Growth Cycles

This paper studies the dynamic interaction between human capital accumulation and economic growth. Capital market imperfections and an indivisibility in human capital investment prevent poor agents from accumulating skills, the acquisition of which positively affects technological progress. More productive technologies in turn require more sophisticated qualification and involve higher training costs. The equilibrium dynamics can be characterized by the joint evolution of productivity growth, the schooling costs, and the income distribution. Under our assumptions, individual incomes follow a non-linear Markov chain. This non-linearity generates endogenous fluctuations of schooling activities and the rate at which productivity improvements occur. We thank an anonymous referee for many helpful suggestions. Support from the German Research Foundation (DFG) under grant KA1519/2-2 is gratefully acknowledged.     

Endogenous Growth: Fragile Foundations?

The Frankel, Romer and Lucas theories of endogenous growth rest on the assumptions of knowledge‐based externalities and price‐taking representative agents. It is argued that, in a context of long‐run growth, these assumptions are mutually incompatible, that representative agents will cooperate to internalize the externalities and will cease to be price takers, and that, therefore, the relevance of theories based on those assumptions must be questioned.     

A Two-Sector Model of Endogenous Growth with Leisure

This paper analyses the equilibrium dynamics of an endogenous growth model with physical and human capital in which leisure enters the utility function. The inclusion of leisure introduces a potential source of non-convexities in our optimization problem and leads to the possible existence of multiple balanced growth paths. This multiplicity of optimal stationary solutions is linked to the assumption that education has no effect on the quality of leisure, and hence a relatively more educated economy may choose to grow faster, and devote more time to income-directed activities. To characterize the set of optimal solutions in our non-concave optimization framework we develop a new method of analysis that should be of interest in related applications.     

Endogenous Growth and Trade Liberalization

We develop an endogenous growth model in which trade liberalization has a positive effect on growth. This effect does not depend on marginal re-allocations nor on knowledge-spillovers. Rather, it is due solely to the increase in market size following the integration of product markets. Our result contradicts a widely-help view that trade on physical goodsper sehas no consequences for long-run growth.[F15]     

Endogenous Growth: A Knife Edge or the Razor's Edge?*

According to much of the recent growth literature, the dramatic worldwide decline in fertility currently taking place should ultimately lead to global economic stagnation. This pessimistic prediction is not shared by the original innovation‐based growth literature. In recent years, however, this strand of the literature has been criticized for resting on implausible knife‐edge assumptions and for its inconsistency with available evidence. In this paper, we argue that this conclusion is unwarranted.     

Endogenous Growth and Negative Externalities

Received March 5, 2001; revised version received August 5, 2002 Published online: April 30, 2003     

A Factor Endowment Theory of Endogenous Growth and International Trade

This paper presents a dynamic general equilibrium model of multi‐country, two‐good and two‐factor, in which both long‐run growth and international trade patterns are examined. In each country, government expenditure on a public intermediate good plays a crucial role in the realization of persistent growth. It is shown that the long‐run pattern of international trade is determined in a Heckscher‐Ohlin manner.     

R&D、R&D溢出、内生增长和内生收敛

根据强调知识与技术创新、知识与技术溢出重要性的当代内生增长理论,本文建立了一个将R&D和R&D溢出与资本积累之间、R&D和R&D溢出与总产出增长之间直接关联起来的动态模型.面板数据协整检验实证分析结果表明R&D和R&D溢出与资本积累之间、R&D和R&D溢出与总产出增长之间分别存在显著的正面长期协整关联.进一步的分析表明,R&D与资本积累之间、R&D与总产出增长之间分别存在显著的长期双向格兰杰因果关系.由此观知,R&D乃长期经济增长源泉之所在.另一方面,尽管资本积累或总产出增长并不格兰杰导致R&D溢出,证据表明R&D溢出格兰杰导致资本积累和总产出增长.这种由R&D溢出到资本积累和总产出增长的单向格兰杰因果关系意味着尽管知识与技术的跨国传播并非必然发生,其实为世界经济增长的重要动力.     

R＆D、R＆D溢出、内生增长和内生收敛

根据强调知识与技术创新、知识与技术溢出重要性的当代内生增长理论，本文建立了一个将R＆D和R＆D溢出与资本积累之间、R＆D和R＆D溢出与总产出增长之间直接关联起来的动态模型。面板数据协整检验实证分析结果表明R＆D和R＆D溢出与资本积累之间、R＆D和R＆D溢出与总产出增长之间分别存在显著的正面长期协整关联。进一步的分析表明，R＆D与资本积累之间、R＆D与总产出增长之间分别存在显著的长期双向格兰杰因果关系。由此观知，R＆D乃长期经济增长源泉之所在。另一方面，尽管资本积累或总产出增长并不格兰杰导致R＆D溢出，证据表明R＆D溢出格兰杰导致资本积累和总产出增长。这种由R＆D溢出到资本积累和总产出增长的单向格兰杰因果关系意味着尽管知识与技术的跨国传播并非必然发生。其实为世界经济增长的重要动力。     

Endogenous Policy Choice: The Case of Pollution and Growth

What determines the relationship between pollution and growth? Are the forces that explain the behavior over time of these quantities potentially useful for understanding more generally the relationship between policies and growth? In this paper we make a first attempt to analyze the equilibrium behavior of two quantities—the level of pollution and the level of income— in a setting in which societies choose, via voting, how much to regulate pollution. Our major finding is that, consistent with the evidence, the relationship between pollution and growth need not be monotone, and that the precise equilibrium nature of the relationship between the two variables depends on whether individuals vote over effluent charges or directly restrict the choice of technology. Moreover, our analysis of the pollution problem suggests that, more generally, endogenous policy choices should be taken seriously as potential sources of heterogeneity when cross-country differences in economic performance are studied. Journal of Economic Literature Classification Numbers: E2, O1, O2, Q2.     

The Cost of Diversity: Endogenous Property Rights and Growth

Well-specified property rightsenhance economic performance but vary considerably across countries.The failure of numerous nation-states to adopt growth-enhancinginstitutions is paradoxical. This paper examines the role ofethnic and linguistic diversity in retarding the developmentof growth-enhancing property rights and in-turn economic growth.The data show that property rights are attenuated in more diversepolities and economic growth is correspondingly lower.     

税收、财政支出与内生经济增长

构建了基于财政支出、税收的内生经济增长模型,并推导出在给定税收、财政支出政策的变化路径时,经济会达到"竞争性分散均衡",税率与经济增长存在"倒-U"型关系,政府投资性支出与经济增长之间正相关。利用中国省际面板数据进行实证检验显示,在我国经济运行中,总产出、消费、投资、政府投资性支出、税率、利息率、工资水平之间存在长期均衡关系。我国宏观税率为28.63%时达到最优值,政府投资性支出对经济增长率存在正向影响,但不同区域间存在较大差异性。     

Immanuel Kant and Endogenous Growth Theory

Despite the modern origins of endogenous growth theory, we argue that the ‘Idea for a Universal History with a Cosmopolitan Aim’ written by Immanuel Kant in 1784 provides an early and coherent example of such a theory. Kant's endogenous growth mechanism is driven by the inherent rivalry that exists between agents which increases effort and strengthens the accumulation of knowledge, which in turn is carried through generations. In an exercise in ‘rational reconstruction’, we present a mathematical model of Kant's mechanism. We use the model to contribute to the contemporary policy debate as to whether ‘keeping up with the Joneses’ leads to excessive effort.     

Endogenous Growth and Natural Resource Scarcity

Endogenous growth theory has rekindled interest in the role of innovation in determining long-term economic growth. Generally, this body of literature has ignored the contribution of natural resources to growth or the role of innovation in overcoming resource scarcities. The latter problem has been a focus of resource economics for many years, but innovation is usually modelled as exogenous rather than endogenous technological change. Recent investigations in political economy have additionally suggested that the supply of innovation may itself be constrained by resource scarcities, especially in the developing world. The following paper attempts to bridge these theoretical gaps through the formal analysis of two issues: First, a simple Romer-Stiglitz model of endogenous growth with resource scarcity and population growth is developed to determine the optimal balanced growth path for the economy. Second, the basic model is extended to allow for the possibility of resource availability constraining the supply of innovation, so that in the long run innovation net of any resource constraint is zero. However, under the latter conditions it is still possible to avoid resource exhaustion and thus achieve a constant level of per capita consumption in the long run. The paper therefore demonstrates that endogenous growth can overcome resource scarcity, but the outcome in the long run depends critically on assumptions concerning any constraints imposed by resource availability on the generation of innovation.     

Endogenous Growth and International Trade*

This paper clarifies and slightly generalizes the basic endogenous-growth model. I prove the basic theorems without the usual assumption that the distribution of knowledge around the world is irrelevant. Results are stated in terms of lemmas, theorems, and corollaries in order to bring out as clearly as possible the role of each assumption.