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Neoclassical vs. endogenous growth analysis: an overview

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  • Bennett T. McCallum

Abstract

This paper begins with an exposition of neoclassical growth theory, including several analytical results such as the distinction between golden-rule and optimal steady states. Next it emphasizes that the neoclassical approach fails to provide any explanation of steady-state growth in per capita values of output and consumption, and also cannot plausibly explain actual growth differences by reference to transitional episodes. Three types of endogenous growth models, which attempt to provide explanations of ongoing per-capita growth, are presented and discussed. The likelihood of strictly justifying steady-state growth with these models is very small, since it would require highly special parameter values, but the models' predictions may be reasonably accurate nevertheless.

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Bibliographic Info

Article provided by Federal Reserve Bank of Richmond in its journal Economic Quarterly.

Volume (Year): (1996)
Issue (Month): Fall ()
Pages: 41-71

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Handle: RePEc:fip:fedreq:y:1996:i:fall:p:41-71

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Cited by:
  1. Tomasz Brodzicki, 2003. "In search for accumulative effects of European economic integration," Working Papers 0301, Economics of European Integration Department, Faculty of Economics, University of Gdansk, Poland.
  2. EL-MEFLEH, Muhannad A. & SHOTAR, Manhal M., 2008. "A Contribution To The Analysis Of The Economic Growth Of Qatar," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 8(1), pages 147-154.
  3. Karl Aiginger & Michael Landesmann, 2002. "Competitive Economic Performance: The European View," WIFO Working Papers 179, WIFO.
  4. Dave Liu, 2007. "Growth Theory and Application: The Case of South Africa," Working Papers 200714, University of Pretoria, Department of Economics.
  5. Boucekkine, Raouf & Del Rio, Fernando & Licandro, Omar, 2000. "Vintage capital and the dynamics of the AK model," CEPREMAP Working Papers (Couverture Orange) 0003, CEPREMAP.
  6. Alexander L. Wolman, 2001. "A primer on optimal monetary policy with staggered price-setting," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 27-52.
  7. Lawrence Bouton & Mariusz A. Sumlinski, 2000. "Trends in Private Investment in Developing Countries : Statistics for 1970-1998," World Bank Publications, The World Bank, number 13986, August.
  8. Musa Jega Ibrahim, 2006. "An evaluation of the developmental implications of the World Bank and IMF lending policies," Working Papers id:535, eSocialSciences.
  9. Amavilah, Voxi Heinrich, 2006. "Intensity of technology use and per capita real GDP across some African countries," MPRA Paper 1675, University Library of Munich, Germany.
  10. KONYA, Laszlo & GUISAN, Maria-Carmen, 2008. "What Does The Human Development Index Tell Us About Convergence?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 8(1), pages 19-40.

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