Abstract

Despite its role as the centerpiece of modern growth theory, the Solow model is decid­edly silent on some of its basic questions: Why is average growth in per capita income so much higher now than it was 200 years ago? Why is per capita income so much higher in the member countries of the OECD than in the less developed countries (LDC) of the world? In this chapter we review the recent literature on endogenous growth.

After a brief review of the basic mechanisms that produces growth, we concentrate on three topics: the impact of fiscal policies on growth, the role of innovation and the relationship between uncertainty and growth.

Keywords

endogenous growth, convex models, competitive markets, taxation, innovation, uncertainty

JEL classification'. H2, H3, O4

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