Working Paper: CEPR ID: DP592
Authors: Zvi Eckstein; Costas Foulides; Tryphon Kollintzas
Abstract: In this paper we synthesize exogenous and endogenous sources of economic growth in a stochastic dynamic general equilibrium model. Endogenous growth can be engendered by internal constant returns to scale or by external increasing returns to scale in the production of human capital or in the production of goods. We provide existence and characterization results for a recursive competitive equilibrium. We show how the different sources of growth combine to generate a plethora of potential growth patterns. Of special interest are the possibilities of steady-state exogenous growth with transitional dynamics dictated by endogenous growth and vice versa. We also characterize the social optimum and a tax-subsidy scheme that supports the social optimum as a recursive competitive equilibrium.
Keywords: exogenous growth; endogenous growth; recursive competitive equilibrium; social optimum; tax-subsidy scheme; time trends
JEL Codes: C62; H21; 041
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| endogenous and exogenous sources of economic growth (O40) | various equilibria and growth patterns (D50) |
| exogenous sources (Q42) | steady-state growth (O40) |
| endogenous growth sources (O41) | transitional dynamics (C69) |
| human and physical capital (J24) | growth patterns (O41) |
| production of investment goods (E22) | growth patterns (O41) |
| log-linear processes (C51) | growth patterns (O41) |