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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, edition 1, volume 1, number 1, December.
    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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    References

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    1. Sergio T. Rebelo, 1990. "Long Run Policy Analysis and Long Run Growth," NBER Working Papers 3325, National Bureau of Economic Research, Inc.
    2. de Hek, Paul & Roy, Santanu, 2001. "On Sustained Growth under Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(3), pages 801-13, August.
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    Cited by:
    1. Long Xin & Pelloni Alessandra, 2011. "Welfare improving taxation on savings in a growth model," wp.comunite 0091, Department of Communication, University of Teramo.
    2. Karl-Johan Lundquist & Lars-Olof Olander, 2010. "Growth cycles: transformation and regional development," SRE-Disc sre-disc-2010_04, Institute for the Environment and Regional Development, Department of Socioeconomics, Vienna University of Economics and Business.
    3. Xin Long & Robert Waldmann & Alessandra Pelloni, 2008. "Lump-Sum Taxes in a R&D Model," Working Paper Series 35-08, The Rimini Centre for Economic Analysis, revised Jan 2008.
    4. 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.
    5. Andrew Atkeson & Ariel T. Burstein, 2011. "Aggregate Implications of Innovation Policy," NBER Working Papers 17493, National Bureau of Economic Research, Inc.
    6. Litina, Anastasia & Palivos, Theodore, 2010. "The Behavior Of The Saving Rate In The Neoclassical Optimal Growth Model," Macroeconomic Dynamics, Cambridge University Press, vol. 14(04), pages 482-500, September.
    7. Patrick Bolton & Hui Chen & Neng Wang, 2011. "A Unified Theory of Tobin's q, Corporate Investment, Financing, and Risk Management," Journal of Finance, American Finance Association, vol. 66(5), pages 1545-1578, October.
    8. Soytas, Ugur & Sari, Ramazan, 2009. "Energy consumption, economic growth, and carbon emissions: Challenges faced by an EU candidate member," Ecological Economics, Elsevier, vol. 68(6), pages 1667-1675, April.
    9. 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, vol. 4(2(8)_ Sum).
    10. 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.
    11. Koethenbuerger, Marko & Lockwood, Ben, 2007. "Does Tax Competition Really Promote Growth?," The Warwick Economics Research Paper Series (TWERPS) 810, University of Warwick, Department of Economics.
    12. Robert Feicht & Wolfgang Stummer, 2010. "Complete Closed-form Solution to a Stochastic Growth Model and Corresponding Speed of Economic Recovery preliminary," DEGIT Conference Papers c015_041, DEGIT, Dynamics, Economic Growth, and International Trade.

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