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Endogenous Growth Models
This macroeconomics revision resource looks at two endogenous growth models:
- Romer’s Leaning-by-Doing Model The source of unbounded growth in this endogenous growth model is that workers become more productive as they repeat the same tasks, and then pass on this knowledge as a free, positive externality that makes other workers and firms more productive too.
- The Human Capital Model In this model, the development of a more productive work force is not free to society. Instead, worker’s must educate themselves and take time off from work to improve their skill set and hence their human capital and overall consumption.
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