This part of the book covers the basic workhorse models of economic growth.
I start with the infinite-horizon neoclassical growth model, which was already discussed in the previous three chapters. A closely related model is the baseline overlapping-generations model of Samuelson and Diamond, and this is the topic of Chapter 9.
Despite the similarities between the two models, they have quite different normative and positive implications, and each model may be appropriate for different sets of issues. It is therefore important to have a detailed discussion of both.This part of the book also presents the basic economic growth model with human capital investments. The inclusion of this model is motivated both because of the increasingly important role that human capital plays in economic growth and macroeconomics, and also as a way of linking macroeconomic approaches to microdata on schooling and returns to education.
Finally, Chapter 11 introduces the first models of sustained economic growth. These are contained in this part of the book rather than the next, because they are models of sustained growth without technological change. Despite their simplicity, these models lead to a number of important economic insights and provide a good introduction to the set of issues that will be discussed in the next part of the book.