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An Endogenously Derived AK-model of Economic Growth

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  • Jensen, Christian

Abstract

Assuming a production process with returns to scale that vary with the intensity it is operated at, an AK-model of endogenous growth with constant returns to scale in production is shown to arise due to replication driven by profit-maximization. If replication occurs at the efficiency-maximizing scale, the result applies also when the number of production processes must be discrete, thus overcoming the so-called integer problem. When competition is imperfect, there is only convergence toward the AK-model for large enough input use, so an economy is more prone to stalling in a steady-state without growth, the smaller and less competitive it is. Inefficient scaling also raises the risk of stalling.

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  • Jensen, Christian, 2013. "An Endogenously Derived AK-model of Economic Growth," MPRA Paper 44487, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:44487
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    References listed on IDEAS

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    Cited by:

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    2. Jensen Christian, 2014. "Replication and Returns to Scale in Production," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 127-148, February.

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    More about this item

    Keywords

    Economic growth; AK-model; Replication; Returns to scale in production; Integer problem;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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