Creator: Goodfriend, Marvin and McDermott, John H. Series: Economic growth and development Abstract:
We explain how a long period of slow pre-industrial development triggers an Industrial Revolution that leads to modern balanced growth. Development in the preindustrial period is driven by increasing returns to specialization made possible by a growing population. Increasing access to specialized intermediate goods eventually makes fundamental technological innovation possible. Innovation initiates the Industrial Revolution, after which productivity grows endogenously regardless of population growth. Industrialization reconciles the crucial role of population early on with its weak relation to per capita product in developed economies. Faster population growth speeds early development, though if it results from a highly productive primitive technology, the consequences for development are ambiguous.
Keyword: Growth and Industrial Revolution Subject (JEL): O11 - Economic development - Macroeconomic analyses of economic development and N10 - Macroeconomics and monetary economics ; Growth and fluctuations - General, international, or comparative
Creator: Segerstrom, Paul Stephen, 1957- Series: Economic growth and development Abstract:
This paper develops a dynamic general equilibrium model of economic growth. The model has a steady state equilibrium in which some firms devote resources to discovering qualitatively improved products and other firms devote resources to copying these products. Rates of both innovation and imitation are endogenously determined based on the outcomes of R&D races between firms. Innovation subsidies are shown to unambiguously promote economic growth. Welfare is only enhanced however if the steady state intensity of innovative effort exceeds a critical level.
Subject (JEL): O41 - One, Two, and Multisector Growth Models and O31 - Technological change ; Research and development - Innovation and invention : Processes and incentives
Creator: Gomme, Paul, 1961- Series: Economic growth and development Abstract:
Results in Lucas (1987) suggest that if public policy can affect the growth rate of the economy, the welfare implications of alternative policies will be large. In this paper, a stochastic, dynamic general equilibrium model with endogenous growth and money is examined. In this setting, inflation lowers growth through its effect on the return to work. However, the welfare costs of higher inflation are extremely modest.
Subject (JEL): E31 - Prices, business fluctuations, and cycles - Price level ; Inflation ; Deflation and O42 - Economic growth and aggregate productivity - Monetary growth models