Endogenous_Growth_Models - Atlas of Economic Models

Endogenous Growth Models

Endogenous growth models, as the name suggests, explain sources of growth within the model. Under the assumptions of Solow technological progress was given exogenously, but endogenous growth models explain the development of technology (knowledge) in terms of either spillover effects or conscious research and development.

"$$A$$" can be thought of as knowledge or ideas that improve the technology of production, and the key principle is that ideas are non-rival and (partially) excludable. The common feature of endogenous growth models is a lack of diminishing marginal returns (i.e. linearity) in some accumulated factor, allowing a constant positive growth rate. In some cases, policy parameters affect both the level and growth rate of output.

  1. Knowledge spillovers and learning-by-doing
  2. Research and development