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Endogenous Growth: Fragile Foundations?
Author(s) -
Hu Yunfang,
Kemp Murray C.,
Shimomura Koji
Publication year - 2006
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2005.00304.x
Subject(s) - romer , economics , externality , endogenous growth theory , context (archaeology) , relevance (law) , microeconomics , rest (music) , neoclassical economics , positive economics , market economy , law , medicine , paleontology , cartography , cardiology , political science , biology , geography , human capital
The Frankel, Romer and Lucas theories of endogenous growth rest on the assumptions of knowledge‐based externalities and price‐taking representative agents. It is argued that, in a context of long‐run growth, these assumptions are mutually incompatible, that representative agents will cooperate to internalize the externalities and will cease to be price takers, and that, therefore, the relevance of theories based on those assumptions must be questioned.