Chapter

A New Growth Model

Maurice FitzGerald Scott

in A New View of Economic Growth

Published in print June 1991 | ISBN: 9780198287421
Published online November 2003 | e-ISBN: 9780191596872 | DOI: http://dx.doi.org/10.1093/0198287429.003.0006

Series: Clarendon Paperbacks

 A New Growth Model

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The model describes a representative firm's decisions regarding its rate of investment and growth of employment, which together determine the rate of growth of its output (and so of the whole economy). The firm maximizes its present value with a rate of investment that is (in this chapter, but not subsequently) exogenously given and self‐financed. The investment opportunities confronting it are continuously renewed because of changes resulting both from other's investment and its own. That is the main innovation of the model, and results in endogenous technical progress. Algebra and diagrams are both used in the analysis.

Keywords: employment; endogenous technical progress; investment; output; present value maximization; representative firm

Chapter.  16701 words.  Illustrated.

Subjects: Economic Development and Growth

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