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Investment and Technical Progress

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  • King, Mervyn A
  • Robson, M H

Abstract

Models in which the growth rate is exogenous provide no role for government in determining growth. In our model, growth is associated with investment, through externalities from "learning by watching," rather than with the level of the capital stock. Presumption of a technical progress function with first increasing and then decreasing returns leads to multiple steady-state growth equilibria. There is also an explicit role of government policy in setting tax rates on output. It follows that two economies with identical structures and stochastic tax policies may exhibit very different growth paths over sustained periods, although the stationary distribution of growth rates is the same. Given the desirability in principle of subsidizing investment, various practical methods are considered. Copyright 1992 by Oxford University Press.

Suggested Citation

  • King, Mervyn A & Robson, M H, 1992. "Investment and Technical Progress," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 8(4), pages 43-56, Winter.
  • Handle: RePEc:oup:oxford:v:8:y:1992:i:4:p:43-56
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    Cited by:

    1. Florian Straßberger, 1995. "Technischer Wandel und wirtschaftliches Wachstum: Einige jüngere Entwicklungen, empirische Ergebnisse und wirtschaftliche Konsequenzen," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 64(2), pages 200-220.
    2. Mario Sportelli, 2000. "Dynamic complexity in a Keynesian growth-cycle model involving Harrod's instability," Journal of Economics, Springer, vol. 71(2), pages 167-198, June.
    3. Mario C. Sportelli, 1998. "Dynamic Complexity in a Keynesian Growth Cycle Model: Harrod's Instability Revised," Working Papers 9706, Business School - Economics, University of Glasgow, revised Jun 1999.
    4. Fusari, Angelo, 1994. "Paths of economic development: modelling factors of endogenous growth," MPRA Paper 75165, University Library of Munich, Germany, revised 1994.
    5. Lawrence Brunner & Michael Shields, 2006. "Estimates of learning by watching and endogenous technical progress in six OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 13(6), pages 351-354.

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