IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/81972.html
   My bibliography  Save this paper

From Solow to Romer: Teaching Endogenous Technological Change in Undergraduate Economics

Author

Listed:
  • Chu, Angus C.

Abstract

Undergraduate students learn economic growth theory through the seminal Solow model, which takes the growth rate of technology as given. To understand the origin of technological progress, we need a model of endogenous technological change. The Romer model fills this important gap in the literature. However, given its complexity, undergraduate students often find the Romer model difficult. This paper proposes a simple method of teaching the Romer model. We add three layers of structure (one at a time) to extend the familiar Solow model into the less familiar Romer model. First, we incorporate a competitive market structure into the Solow model. Then, we modify the competitive market structure into a monopolistic market structure. Finally, we introduce an R&D sector that creates inventions.

Suggested Citation

  • Chu, Angus C., 2015. "From Solow to Romer: Teaching Endogenous Technological Change in Undergraduate Economics," MPRA Paper 81972, University Library of Munich, Germany, revised Oct 2017.
  • Handle: RePEc:pra:mprapa:81972
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/81972/1/MPRA_paper_81972.pdf
    File Function: original version
    Download Restriction: no

    File URL: https://mpra.ub.uni-muenchen.de/83815/1/MPRA_paper_83815.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Philippe Aghion & Peter Howitt, 2009. "The Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012634, April.
    3. Philippe Aghion & Diego Comin & Peter Howitt & Isabel Tecu, 2016. "When Does Domestic Savings Matter for Economic Growth?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(3), pages 381-407, August.
    4. Ai-Ting Goh & Jacques Olivier, 2002. "Optimal Patent Protection in a Two-Sector Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1191-1214, November.
    5. John B. Taylor, 2000. "Teaching Modern Macroeconomics at the Principles Level," American Economic Review, American Economic Association, vol. 90(2), pages 90-94, May.
    6. Lewis Evans & Neil Quigley & Jie Zhang, 2003. "Optimal price regulation in a growth model with monopolistic suppliers of intermediate goods," Canadian Journal of Economics, Canadian Economics Association, vol. 36(2), pages 463-474, May.
    7. Daron Acemoglu, 2013. "Economic Growth and Development in the Undergraduate Curriculum," The Journal of Economic Education, Taylor & Francis Journals, vol. 44(2), pages 169-177, June.
    8. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    9. -, 2009. "Economic growth in the Caribbean," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38668, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bongers, Anelí & Gómez, Trinidad & Torres, José L., 2020. "Teaching dynamic General equilibrium macroeconomics to undergraduates using a spreadsheet," International Review of Economics Education, Elsevier, vol. 35(C).
    2. Jussi Heikkilä & Timo Ali-Vehmas & Julius Rissanen, 2021. "The Link Between Standardization and Economic Growth: A Bibliometric Analysis," International Journal of Standardization Research (IJSR), IGI Global, vol. 19(1), pages 1-25, January.
    3. Bongers, Anelí & Molinari, Benedetto & Torres, José L., 2022. "Computers, Programming and Dynamic General Equilibrium Macroeconomic Modeling," MPRA Paper 112505, University Library of Munich, Germany.
    4. Chu, Angus C., 2020. "Advanced Macroeconomics for Undergraduates," MPRA Paper 98249, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Juhro, Solikin M. & Narayan, Paresh Kumar & Iyke, Bernard Njindan & Trisnanto, Budi, 2020. "Is there a role for Islamic finance and R&D in endogenous growth models in the case of Indonesia?," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    2. Gilad Sorek, 2017. "Market Power and Growth through Vertical and Horizontal Competition," Auburn Economics Working Paper Series auwp2017-01, Department of Economics, Auburn University.
    3. Annarita Baldanzi & Klaus Prettner & Paul Tscheuschner, 2019. "Longevity-induced vertical innovation and the tradeoff between life and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(4), pages 1293-1313, October.
    4. Claudio Baccianti & Andreas Löschel, 2014. "The Role of Product and Process Innovation in CGE Models of Environmental Policy. WWWforEurope Working Paper No. 68," WIFO Studies, WIFO, number 47501, April.
    5. Kumar, Sanjesh & Singh, Baljeet, 2019. "Barriers to the international diffusion of technological innovations," Economic Modelling, Elsevier, vol. 82(C), pages 74-86.
    6. Alessandra Cepparulo & Gilles Mourre, 2020. "How and How Much? The Growth-Friendliness of Public Spending through the Lens," European Economy - Discussion Papers 132, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    7. Sulekha Hembram & Souparna Maji & Sushil Kr. Haldar, 2019. "Club Convergence among the Major Indian States During 1982–2014: Does Investment in Human Capital Matter?," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 20(2), pages 184-204, September.
    8. Strulik, Holger & Werner, Katharina, 2014. "Elite education, mass education, and the transition to modern growth," University of Göttingen Working Papers in Economics 205, University of Goettingen, Department of Economics.
    9. Knut Blind & Florian Ramel & Charlotte Rochell, 2022. "The influence of standards and patents on long-term economic growth," The Journal of Technology Transfer, Springer, vol. 47(4), pages 979-999, August.
    10. Paul Welfens, 2015. "Innovation, inequality and a golden rule for growth in an economy with Cobb-Douglas function and an R&D sector," International Economics and Economic Policy, Springer, vol. 12(4), pages 469-496, October.
    11. Tsuboi, Mizuki, 2019. "Resource scarcity, technological progress, and stochastic growth," Economic Modelling, Elsevier, vol. 81(C), pages 73-88.
    12. Lange, Steffen & Pütz, Peter & Kopp, Thomas, 2018. "Do Mature Economies Grow Exponentially?," Ecological Economics, Elsevier, vol. 147(C), pages 123-133.
    13. Attar, M. Aykut, 2016. "Economic Growth and Technological Progress in Turkey: An Analysis of Schumpeterian Mechanisms," MPRA Paper 73255, University Library of Munich, Germany.
    14. Jayasooriya, Sujith, 2020. "Revised Macro-Mincer Model for Human Capital Investment in Economic Growth," MPRA Paper 100747, University Library of Munich, Germany.
    15. Hof, Franz X. & Prettner, Klaus, 2019. "The quest for status and R&D-based growth," Journal of Economic Behavior & Organization, Elsevier, vol. 162(C), pages 290-307.
    16. Julia Bock-Schappelwein & Jürgen Janger & Andreas Reinstaller, 2012. "Bildung 2025 – Die Rolle von Bildung in der österreichischen Wirtschaft," WIFO Studies, WIFO, number 45200, April.
    17. Tomasz Brodzicki, 2015. "Shallow determinants of growth of Polish regions. Empirical analysis with panel data methods," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 39, pages 25-40.
    18. Emmanuel Bovari & Victor Court, 2019. "Energy, knowledge, and demo-economic development in the long run: a unified growth model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01698755, HAL.
    19. Jo Reynaerts & Jakob Vanschoonbeek, 2022. "The economics of state fragmentation: Assessing the economic impact of secession," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(1), pages 82-115, January.
    20. repec:zbw:bofrdp:2013_001 is not listed on IDEAS
    21. Rana P. Maradana & Rudra P. Pradhan & Saurav Dash & Kunal Gaurav & Manju Jayakumar & Debaleena Chatterjee, 2017. "Does innovation promote economic growth? Evidence from European countries," Journal of Innovation and Entrepreneurship, Springer, vol. 6(1), pages 1-23, December.

    More about this item

    Keywords

    economic growth; endogenous technological change; the Romer model;
    All these keywords.

    JEL classification:

    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:81972. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.