Question

In: Economics

Derive the equilibrium in the Endogenous Growth Model. According to this model, what is the source...

Derive the equilibrium in the Endogenous Growth Model. According to this model, what is the source of economic growth?

Solutions

Expert Solution

Endogenous Growth Model was developed as a recreation to omissions and defeciencies in the Solo Swan neoclassical growth model. it is a new theory which explains the long run growth rate of an economy on the basis of endogenous factors.The endogenous growth models emphasise technical progress resulting from the rate of investment the size of the capital stock and the stock of human capital.The AK model which is the simplest endogenous model gives a constant savings rate of endogenous growth and assumes a constant exogenous saving rate. it uses the assumptions that he production function does not exhibit diminishing returns to scale to lead to endogenous growth.

The source of economic growth in the endogenous model is the government policies effects on the long run permanent growth rate of the economy. variations in the standard of living accross the countries income per capita increasesd.


Related Solutions

a) In the Solow growth model, capital exhibits diminishing returns. In a basic endogenous growth model,...
a) In the Solow growth model, capital exhibits diminishing returns. In a basic endogenous growth model, capital exhibits constant returns. What is the main implication of these differences to economic growth of a country/countries? b) Suppose unemployment rate in Sweden this year dropped to the lowest level ever than before. Oddly, employment rate also fell from the prior year. How was this possible?
The primary difference between the neoclassical growth model and endogenous growth models is that A. the...
The primary difference between the neoclassical growth model and endogenous growth models is that A. the neoclassical growth model assumes that technology is exogenous. B. all of the above C. changes in savings rates can affect growth in the long-run in endogenous growth models. D. endogenous growth models attempt to explain movements in technology within the model.
In the Solow growth model, capital exhibits diminishing returns. In a basic endogenous growth model, capital...
In the Solow growth model, capital exhibits diminishing returns. In a basic endogenous growth model, capital exhibits constant returns. What is the main implication of these differences to economic growth of a country/countries?
The endogenous growth predicted by the AK model is due to the assumption of a constant...
The endogenous growth predicted by the AK model is due to the assumption of a constant marginal product of capital, true or false? (diagram + econ theories)
Explain why there is no convergence in the Human Capital (Endogenous Growth) model
Explain why there is no convergence in the Human Capital (Endogenous Growth) model
Explain the simple version of the endogenous (neo-classical) growth model. Contrast this model with the standard...
Explain the simple version of the endogenous (neo-classical) growth model. Contrast this model with the standard Solow model of growth. In particular, explain why the endogenous growth model does not necessarily lead to interregional convergence
Compare the neoclassical model, the new endogenous growth model and the strategic trade theory. Any differences...
Compare the neoclassical model, the new endogenous growth model and the strategic trade theory. Any differences between these theories? What are the differences? Explain in detail.
Economic growth a.         According to the Solow model of economic growth, what determines the growth rate of...
Economic growth a.         According to the Solow model of economic growth, what determines the growth rate of real income per person in the very long run (steady state)?  Explain. b.         What public policies have been proposed to increase the rate of economic growth?  Explain.
Critically access the theoretical propositions of the Solow neo-classical model of growth. How does endogenous growth...
Critically access the theoretical propositions of the Solow neo-classical model of growth. How does endogenous growth model help to address some of the weaknesses of the Solow model? Illustrate the implications of technical advances and saving rates increase on growth according to both of these approaches.50 marks
Endogenous growth is most closely associated with what theory of economic development?
Endogenous growth is most closely associated with what theory of economic development?Choose one:A. Todaro's model of growthB. the Solow modelC. New Growth TheoryD. classical growth theory
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT