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An Asymptotically Non-Scale Endogenous Growth Model

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  • Harashima, Taiji

Abstract

This paper presents an endogenous growth model in which the economy grows without either scale effects or population growth. The key mechanism is substitution between investments in capital and technology when firms face increasing uncompensated knowledge spillovers. The model indicates that, as population increases, firms invest more in capital than in technology because there are more uncompensated knowledge spillovers as a result of both Marshall-Arrow-Romer and Jacobs externalities. Consequently, scale effects asymptotically diminish as population increases and disappear at a sufficiently large population while the economy can grow without population growth. In present-day industrialized economies, therefore, both scale effects and population growth have little influence over economic growth.

Suggested Citation

  • Harashima, Taiji, 2010. "An Asymptotically Non-Scale Endogenous Growth Model," MPRA Paper 26025, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:26025
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    References listed on IDEAS

    as
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    6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    16. André van Stel & Henry Nieuwenhuijsen, 2002. "Knowledge Spillovers and Economic Growth," Tinbergen Institute Discussion Papers 02-051/3, Tinbergen Institute.
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    Citations

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    Cited by:

    1. Harashima, Taiji, 2015. "Why Has the U.S. Current Account Deficit Persisted? International Sustainable Heterogeneity under Floating Exchange Rates," MPRA Paper 67177, University Library of Munich, Germany.
    2. Harashima, Taiji, 2014. "The Representative Household Assumption Requires sustainable Heterogeneity in Dynamic Models," MPRA Paper 57520, University Library of Munich, Germany.
    3. Harashima, Taiji, 2011. "A Model of Total Factor Productivity Built on Hayek’s View of Knowledge: What Really Went Wrong with Socialist Planned Economies?," MPRA Paper 29107, University Library of Munich, Germany.

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    More about this item

    Keywords

    Endogenous growth; Scale effects; Non scale model; Balanced growth; Knowledge spillovers;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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