Endogenous growth theory — a crash course

24 Nov, 2016 at 17:11 | Posted in Economics | 2 Comments



  1. Here is a financial market example.

    If you have 1 share price $25 of stock X with $100 cash in hands &
    I have 1 share price $20 of stock Y with $100 cash in hands &
    we exchange these stocks,
    then each of us could have 1 share price $200 of either stock X or Y still with $100 in hands.

  2. In this illustration, both ideas could be the same and they squeeze down to one idea again.

    Otherwise endogenous growth is certainly how macro-economies can improve and become more prosperous. It is achieved when investment results in a greater value of output over a specific time than what is spent in producing this output.

    The danger is that when the improvement is in infrastructure only, the beneficiaries are land owners (and their banks) whose speculation in their sites has resulted in greater rents and sales prices becoming viable (for which the taxpayer foots the bill).

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