Endogenous Growth when Firms and Consumers Behave Rationally in a Neoclassical Framework
AbstractThis paper presents a simple Neoclassical Growth Model in which technological change is endogenous and saving behaviour affects long-term equilibrium growth, despite its simple structure and reliance on all standard Neoclassical assumptions. The only relevant difference between this model and the standard models is that firms pursue an inter-temporal optimisation, which assures that their current decisions affect their future productivity. As a consequence, to invest in technology becomes a rational decision of firms. This simple improvement endows the Neoclassical Model to overcome two of its major shortcomings as pointed out in the literature.
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Bibliographic InfoPaper provided by Datamétrica Consultoria Econômica in its series Working Papers with number 59.
Length: 33 pages
Date of creation: 2006
Date of revision: 2006
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Endogenous growth; Neoclassical growth; endogenous technological change;
Find related papers by JEL classification:
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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