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An Asymptotically Non-Scale Endogenous Growth Model

  • Harashima, Taiji

This paper presents an endogenous growth model in which the economy grows without either scale effects or population growth. The key mechanism is substitution between investments in capital and technology when firms face increasing uncompensated knowledge spillovers. The model indicates that, as population increases, firms invest more in capital than in technology because there are more uncompensated knowledge spillovers as a result of both Marshall-Arrow-Romer and Jacobs externalities. Consequently, scale effects asymptotically diminish as population increases and disappear at a sufficiently large population while the economy can grow without population growth. In present-day industrialized economies, therefore, both scale effects and population growth have little influence over economic growth.

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File URL: https://mpra.ub.uni-muenchen.de/44393/1/MPRA_paper_44393.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26025.

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Date of creation: 20 Oct 2010
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Handle: RePEc:pra:mprapa:26025
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  1. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  2. Peretto, Pietro F., 1996. "Technological Change and Population Growth," Working Papers 96-28, Duke University, Department of Economics.
  3. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
  4. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  5. Charles I. Jones, . "Growth: With or Without Scale Effects?," Working Papers 99001, Stanford University, Department of Economics.
  6. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  7. Peretto, P. & Smulders, J.A., 2002. "Technological distance, growth and scale effects," Other publications TiSEM bdce08a7-4ad9-4427-a99e-f, Tilburg University, School of Economics and Management.
  8. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
  9. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-84, August.
  10. Kenneth J. Arrow, 1962. "The Economic Implications of Learning by Doing," Review of Economic Studies, Oxford University Press, vol. 29(3), pages 155-173.
  11. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
  12. Charles I. Jones, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 495-525.
  13. Dinopoulos, Elias & Thompson, Peter, 1998. "Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-35, December.
  14. Eicher, Theo S & Turnovsky, Stephen J, 1999. "Non-scale Models of Economic Growth," Economic Journal, Royal Economic Society, vol. 109(457), pages 394-415, July.
  15. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
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