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Non-Exponential Growth Theory

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  • Ryo Horii

Abstract

To explain the observed stability in real GDP growth, endogenous growth theories typically need a knife-edge degree of externality, which is not supported by microlevel observations. We develop a model where a constant number of new goods are introduced per unit of time and focus on the movement of prices and quantities after introduction. In this environment, positive real GDP growth, as measured by SNA statistics, does not necessarily mean exponential growth in the quantity, quality, or variety of final outputs. We derive the conditions under which measured growth can be sustained, which are less restrictive than typical knife-edge assumptions.

Suggested Citation

  • Ryo Horii, 2023. "Non-Exponential Growth Theory," ISER Discussion Paper 1212rr, Institute of Social and Economic Research, Osaka University, revised Sep 2024.
    • Handle: RePEc:dpr:wpaper:1212rr
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    References listed on IDEAS

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    1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    2. Zvi Griliches, 1998. "R&D and Productivity: The Econometric Evidence," NBER Books, National Bureau of Economic Research, Inc, number gril98-1, January.
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