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Neoclassical Models of Endogenous Growth: The Effects of Fiscal Policy, Innovation and Fluctuations

In: Handbook of Economic Growth

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  • Jones, Larry E.
  • Manuelli, Rodolfo E.

Abstract

Despite its role as the centerpiece of modern growth theory, the Solow model is decidedly silent on some of its basic questions: Why is average growth in per capita income so much higher now than it was 200 years ago? Why is per capita income so much higher in the member countries of the OECD than in the less developed countries (LDC) of the world? In this chapter we review the recent literature on endogenous growth. We concentrate on convex models and we restrict attention to the case in which markets are competitive.After a brief review of the basic mechanisms that produces growth, we concentrate on three topics: the impact of fiscal policies on growth, the role of innovation and the relationship between uncertainty and growth.

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This chapter was published in:

  • Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, Elsevier, edition 1, volume 1, number 1.
    This item is provided by Elsevier in its series Handbook of Economic Growth with number 1-01.

    Handle: RePEc:eee:grochp:1-01

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    Cited by:
    1. Andrew Atkeson & Ariel T. Burstein, 2011. "Aggregate Implications of Innovation Policy," NBER Working Papers 17493, National Bureau of Economic Research, Inc.
    2. Litina, Anastasia & Palivos, Theodore, 2010. "The Behavior Of The Saving Rate In The Neoclassical Optimal Growth Model," Macroeconomic Dynamics, Cambridge University Press, Cambridge University Press, vol. 14(04), pages 482-500, September.
    3. Neng Wang & Hui Chen & Patrick Bolton, 2010. "A unified theory of Tobin's q, corporate investment, financing, and risk management," 2010 Meeting Papers, Society for Economic Dynamics 609, Society for Economic Dynamics.
    4. Benjamin Lockwood & Marko Köthenbürger, 2007. "Does Tax Competition Really Promote Growth?," CESifo Working Paper Series 2102, CESifo Group Munich.
    5. Long Xin & Pelloni Alessandra, 2011. "Welfare improving taxation on saving in a growth model," wp.comunite, Department of Communication, University of Teramo 0071, Department of Communication, University of Teramo.
    6. Xin Long & Robert Waldmann & Alessandra Pelloni, 2008. "Lump-Sum Taxes in a R&D Model," Working Paper Series, The Rimini Centre for Economic Analysis 35-08, The Rimini Centre for Economic Analysis, revised Jan 2008.
    7. Ivan O. KITOV, 2009. "The Evolution Of Real Gdp Per Capita In Developed Countries," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(2(8)_ Sum).
    8. Soytas, Ugur & Sari, Ramazan, 2009. "Energy consumption, economic growth, and carbon emissions: Challenges faced by an EU candidate member," Ecological Economics, Elsevier, Elsevier, vol. 68(6), pages 1667-1675, April.
    9. Prashanth Mahagaonkar & Rainer Schweickert & Aditya S. Chavali, 2009. "Sectoral R&D Intensity and Exchange Rate Volatility: A Panel Study for OECD Countries," Kiel Working Papers 1531, Kiel Institute for the World Economy.
    10. Robert Feicht & Wolfgang Stummer, 2010. "Complete Closed-form Solution to a Stochastic Growth Model and Corresponding Speed of Economic Recovery preliminary," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c015_041, DEGIT, Dynamics, Economic Growth, and International Trade.
    11. Karl-Johan Lundquist & Lars-Olof Olander, 2010. "Growth cycles: transformation and regional development," SRE-Disc, Institute for the Environment and Regional Development, Department of Socioeconomics, Vienna University of Economics and Business sre-disc-2010_04, Institute for the Environment and Regional Development, Department of Socioeconomics, Vienna University of Economics and Business.
    12. Justin Yifu Lin & Pengfei Zhang, 2007. "Development Strategy, Optimal Industrial Structure and Economic Growth in Less Developed Countries," Development Economics Working Papers 22710, East Asian Bureau of Economic Research.

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