Lecture 5 8 - lead to specialization new products and more...

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Endogenous Growth Theory There are mainly three approaches: 1. Increasing returns to scale The Solow model assumes a production function with diminishing marginal products. One can relax this assumption and considers an “Increasing returns to scale” technology. For example, bigger markets
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Unformatted text preview: lead to specialization, new products and more trade, hence more research and development (R&D). 2. Embodied technology and positive externalities (Romer’s One Sector Model) 3. Human Capital Accumulation (Lucas Two Sectors Model)...
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