This paper investigates the relevance of government purchasing behavior for innovationbased economic growth. We construct a parsimonious Schumpeterian growth model in which demand from the public sphere can effectively alter the economy’s rate of technological change. We incorporate results of various empirical studies arguing that public sector demand acts as incentive for private innovation a...

The traditional view of growth and fluctuations implies that aggregate demand shocks result in only transitory departures from trend or “normal” output, which is determined exclusively by aggregate supply factors. Using a simple dynamic framework for a less-developed economy, a series of models is developed to show that aggregate demand can have a permanent effect on economic growth. It is show...

The purpose of this article is to identify the role of population size, population growth and population ageing in models of endogenous economic growth. While in exogenous growth models demographic variables are linked to economic prosperity mainly via the population size, the structure of the workforce, and the capital intensity of workers, endogenous growth models and their successors also al...

Competition among banks promotes growth and stability for an economy with production externality. Following Arrow and Debreu (1954) [6], I formulate a standard growth model with externality—a twoperiod version of Romer (1986) [39]—as a game among consumers, firms, and intermediaries. The Walrasian equilibrium, with an auctioneer, does not achieve the social optimum. Without an auctioneer or int...

We analyze in this paper the growth and welfare consequences arising from the lack of auditing commitment in a credit market with costly state verification. Specifically, two endogenous growth models, of which one allows lenders to commit to costly auditing strategies to identify borrowers’ investment returns and the other does not, are compared. We show that the inability to commit acts as an ...

Because of its inappropriability, protection of property rights is widely recognized as being the state’s responsibility. Moreover, recent empirical evidence suggests that it leads to higher investment levels and faster growth. Nevertheless, the extent of property rights protection differs significantly across countries. This paper endogenizes the emergence of property rights within a simple gr...

We analyze in this paper the growth and welfare consequences arising from the lack of auditing commitment in a credit market with costly state verification. Specifically, two endogenous growth models, of which one allows lenders to commit to costly auditing strategies to identify borrowers’ investment returns and the other does not, are compared. We show that the inability to commit acts as an ...

This paper provides a unified framework for quantifying the cross-country and cross-sector interactions among trade, innovation, knowledge diffusion. is used to study effect of trade liberalization in an endogenous growth model which comparative advantage stock are determined by innovation The calibrated match observed heterogeneity production, efficiency, spillovers. counterfactual analysis sh...