Describe the main ideas of endogenous growth theory. What does it have to say about the role of government in economic growth?
What will be an ideal response?
Endogenous growth theory explains the main sources of productivity growth: human capital (the knowledge, skills, and training of individuals) and technological innovation (caused by research and development programs and learning by doing). Government may play a positive role, because policies that increase the capital—labor ratio may lead to a virtuous circle of growth, raising living standards. Also, the government may foster education and research and development.
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The present value of a payment K that is schedule to be received t periods from now is
A) K - i / (1 + i)t. B) K / (1 - i)k. C) K / (1 + i)t. D) K / (K + i)t.
Most economists believe that the source of European high unemployment in the past two decades is
A) labor market institutions. B) tight monetary policy. C) tight fiscal policy. D) financial crisis.