Coursework.Info - Inspiration in an Instant

On the left is an image preview of every page of this document, and below are the first 150 words with formatting removed:

Economics of Growth and Innovation ASSIGNMENT Based upon the following readings: Romer, P. (1986), "Increasing Returns and Long-Run Growth", Journal of Political Economy, 94, 1002-37. (Sections I-III) Romer, P. (1990), "Endogenous Technological Change", Journal of Political Economy, 98, 71-102. (Sections I-II) 1. Introduction: Theories of Economic Growth For centuries, economists have tried to explain economic growth and what it depends upon. Earlier models, provided by Adam Smith and Robert Solow, emphasized the role of capital accumulation. For instance, in Solow's model (exogenous), growth depends upon increasing the stock of capital goods to expand productive capacity. Thus, the combination of capital deepening1 and technological improvement by nations explains the important tendencies in economic growth. However, his view is based on the fact that adding more capital goods to a fixed amount of labour will diminish the returns to capital. Also, increased accumulation of capital will force downwards the rate of return and eventually, the returns will...

Get instant access

• Instant, unlimited access to our documents in full
• Swap your work for free access, or pay £4.99
• To see the full version of this document and 149,486 others