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Endogenous Growth Theory
Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces. Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth. The theory also focuses on positive externalities and spillover effects of a knowledge-based economy which will lead to economic development. The endogenous growth theory primarily holds that the long run growth rate of an economy depends on policy measures. For example, subsidies for research and development or education increase the growth rate in some endogenous growth models by increasing the incentive for innovation. Models In the mid-1980s, a group of growth theorists became increasingly dissatisfied with common accounts of exogenous factors determining long-run growth, such as the Solow–Swan model. They favored a model that replaced the exogenous growth variable (unexplained technical progress) with a model in whic ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economic Growth
In economics, economic growth is an increase in the quantity and quality of the economic goods and Service (economics), services that a society Production (economics), produces. It can be measured as the increase in the inflation-adjusted Output (economics), output of an economy in a given year or over a period of time. The rate of growth is typically calculated as List of countries by real GDP growth rate, real gross domestic product (GDP) growth rate, List of countries by real GDP per capita growth, real GDP per capita growth rate or List of countries by GNI per capita growth, GNI per capita growth. The "rate" of economic growth refers to the Exponential growth, geometric annual rate of growth in GDP or GDP per capita between the first and the last year over a period of time. This growth rate represents the trend in the average level of GDP over the period, and ignores any fluctuations in the GDP around this trend. Growth is usually calculated in "real" value, which is real v ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
AK Model
The AK model of economic growth is an endogenous growth model used in the theory of economic growth, a subfield of modern macroeconomics. In the 1980s it became progressively clearer that the standard neoclassical exogenous growth models were theoretically unsatisfactory as tools to explore long run growth, as these models predicted economies without technological change and thus they would eventually converge to a steady state, with zero per capita growth. A fundamental reason for this is the diminishing return of capital; the key property of AK endogenous-growth model is the absence of diminishing returns to capital. In lieu of the diminishing returns of capital implied by the usual parameterizations of a Cobb–Douglas production function, the AK model uses a linear model where output is a linear function of capital. Its appearance in most textbooks is to introduce endogenous growth theory. Graphical representation of the model The AK model production function is a special ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Free Entry
In economics, free entry is a condition in which firms can freely enter the market for an economic good by establishing production and beginning to sell the product. The assumption of free entry implies that if there are firms earning excessively high profits in a given industry, new firms that also seek a high profit are likely to start to produce or change into a production of the same good to join the market. In such a case there are no barriers preventing a start-up firm from competing. Where an opportunity of a profit arises we assume that there will also be firms entering the market for the certain good and compete for it. In most markets this condition is present only in the long run. The assumption of free entry doesn't mean that a firm is simply able to set up a shop without any costs incurred. It is clear that the new entrant needs to gain the capital that they need for operating in the industry. Therefore, even with a free entry to a market the entrant still has to f ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Monopoly
A monopoly (from Greek language, Greek and ) is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by a lack of economic Competition (economics), competition to produce a particular thing, a lack of viable substitute goods, and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit. The verb ''monopolise'' or ''monopolize'' refers to the ''process'' by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge Monopoly price, overly high prices, which is associated with unfair price raises. Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market). A monopoly may als ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Perfect Competition
In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In Economic model, theoretical models where conditions of perfect competition hold, it has been demonstrated that a Market (economics), market will reach an Economic equilibrium, equilibrium in which the quantity supplied for every Goods and services, product or service, including Workforce, labor, equals the quantity demanded at the current price. This equilibrium would be a Pareto optimum. Perfect competition provides both allocative efficiency and productive efficiency: * Such markets are ''allocatively efficient'', as output will always occur where marginal cost is equal to average revenue i.e. price (MC = AR). In perfect competition, any Profit maximization, profit-maximizing producer faces a market price equal to its marginal cost (P = MC). This implies that ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Knowledge Spillover
Knowledge spillover is an exchange of ideas among individuals.Carlino, Gerald A. (2001) Business Review Knowledge Spillovers: Cities' Role in the New Economy.'' Q4 2001. Knowledge spillover is usually replaced by terminations of technology spillover, R&D spillover and/or spillover (economics) when the concept is specific to technology management and innovation economics. In knowledge management economics, knowledge spillovers are non-rival knowledge market costs incurred by a party not agreeing to assume the costs that has a spillover effect of stimulating technological improvements in a neighbor through one's own innovation. Such innovations often come from specialization within an industry. A recent, general example of a knowledge spillover could be the collective growth associated with the research and development of online social networking tools like Facebook, YouTube YouTube is an American social media and online video sharing platform owned by Google. YouT ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Microfoundations
Microfoundations are an effort to understand macroeconomic phenomena in terms of individual agents' economic behavior and interactions.Maarten Janssen (2008),Microfoundations, in ''The New Palgrave Dictionary of Economics'', 2nd ed. Research in microfoundations explores the link between Macroeconomics, macroeconomic and Microeconomics, microeconomic principles in order to explore the aggregate relationships in macroeconomic models. During recent decades, macroeconomists have attempted to combine microeconomic models of individual behaviour to derive the relationships between macroeconomic variables. Presently, many macroeconomic models, representing different theories, are Dynamic stochastic general equilibrium, derived by aggregating microeconomic models, allowing economists to test them with both macroeconomic and microeconomic data. However, microfoundations research is still heavily debated with management, strategy and organization scholars having varying views on the "micro-m ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Solow Model
Solow is a surname. Notable people with the surname include: * Alan Solow, American lawyer and Jewish leader * Herbert Solow (journalist) (1903–1964), American journalist * Herbert Franklin Solow (1931–2020), American producer, director, studio executive, talent agent, and writer * Jeffrey Solow (born 1949), American cello virtuoso * Jennifer Solow, American novelist * Robert Solow (1924–2023), American economist, winner of the Nobel Prize in Economics * Sheldon Solow (1928–2020), American real estate mogul and billionaire See also * Solow (horse), a Thoroughbred racehorse * The Solow Building The Solow Building, also known as 9 West 57th Street, is a skyscraper in the Midtown Manhattan neighborhood of New York City. Completed in 1974 and designed by Gordon Bunshaft of Skidmore, Owings & Merrill, it is west of Fifth Avenue between 57t ..., a Manhattan skyscraper * SoLow, Dutch retailer {{surname Slavic-language surnames Surnames of Jewish origin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Harrod–Domar Model
The Harrod–Domar model is a Keynesian model of economic growth. It is used in development economics to explain an economy's growth rate in terms of the level of saving and of capital. It suggests that there is no natural reason for an economy to have balanced growth. The model was developed independently by Roy F. Harrod in 1939, and Evsey Domar in 1946, although a similar model had been proposed by Gustav Cassel in 1924. The Harrod–Domar model was the precursor to the exogenous growth model. Neoclassical economists claimed shortcomings in the Harrod–Domar model—in particular the instability of its solution—and, by the late 1950s, started an academic dialogue that led to the development of the Solow–Swan model. According to the Harrod–Domar model there are three kinds of growth: warranted growth, actual growth and natural rate of growth. Warranted growth rate is the rate of growth at which the economy does not expand indefinitely or go into recession. Actual growt ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Exogenous Variable
In an economic model, an exogenous variable is one whose measure is determined outside the model and is imposed on the model, and an exogenous change is a change in an exogenous variable.Mankiw, N. Gregory. ''Macroeconomics'', third edition, 1997.Varian, Hal R., ''Microeconomic Analysis'', third edition, 1992.Chiang, Alpha C. ''Fundamental Methods of Mathematical Economics'', third edition, 1984. In contrast, an endogenous variable is a variable whose measure is determined by the model. An endogenous change is a change in an endogenous variable in response to an exogenous change that is imposed upon the model. The term ' endogeneity' in econometrics has a related but distinct meaning. An endogenous random variable is correlated with the error term in the econometric model, while an exogenous variable is not. Examples In the LM model of interest rate determination, the supply of and demand for money Money is any item or verifiable record that is generally accepted as payment ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Constant Returns To Scale
In economics, the concept of returns to scale arises in the context of a firm's production function. It explains the long-run linkage of increase in output (production) relative to associated increases in the inputs (factors of production). In the long run, all factors of production are variable and subject to change in response to a given increase in production scale. In other words, returns to scale analysis is a long-term theory because a company can only change the scale of production in the long run by changing factors of production, such as building new facilities, investing in new machinery, or improving technology. There are three possible types of returns to scale: * If output increases by the same proportional change as all inputs change then there are constant returns to scale (CRS). For example, when inputs (labor and capital) increase by 100%, output increases by 100%. * If output increases by less than the proportional change in all inputs, there are decreasing retu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Output Elasticity
In economics, output elasticity is the percentage change of output ( GDP or production of a single firm) divided by the percentage change of an input. It is sometimes called ''partial output elasticity'' to clarify that it refers to the change of only one input. As with every elasticity, this measure is defined locally, i.e. defined at a point. If the production function contains only one input, then the output elasticity is also an indicator of the degree of returns to scale. If the coefficient of output elasticity is greater than 1, then production is experiencing increasing returns to scale. If the coefficient is less than 1, then production is experiencing decreasing returns to scale. If the coefficient is 1, then production is experiencing constant returns to scale. Note that returns to scale may change as the level of production changes. A different usage of the term "output elasticity" is defined as the percentage change in output per one percent change in ''all'' the inpu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
