An endogenous growth model is developed, where the balanced growth path is unstable and the economy achieves sustainable growth through cycles, perpetually moving back and forth between two phases. One phase is characterized by higher investment, no innovation, and a competitive market structure, as in the neoclassical model. The other phase is characterized by lower investment, high innovation, and a more monopolistic market structure, as in the neo-Schumpetarian model. Both investment and innovation are essential in sustaining growth indefinitely and yet only one of them appears to play a dominant role in each phase.
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Article provided by Econometric Society in its journal Econometrica.
Volume (Year): 67 (1999) Issue (Month): 2 (March) Pages: 335-348 Download reference. The following formats are available: HTML
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Kiminori Matsuyama, 1996.
"Growing Through Cycles,"
Discussion Papers
1203, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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