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AN ENDOGENOUSLY DERIVED AK MODEL OF ECONOMIC GROWTH

Published online by Cambridge University Press:  23 June 2017

Christian Jensen
Christian Jensen*
Affiliation:
University of South Carolina
*
Address correspondence to: Christian Jensen, Department of Economics, University of South Carolina, 1014 Greene Street, Columbia, SC 29208, USA; e-mail: cjensen@alumni.cmu.edu.
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Abstract

When the returns to scale of a production process vary with the intensity it is operated at, an AK model with constant returns to scale in production arises endogenously due to replication driven by profit maximization. If replication occurs at the efficiency-maximizing scale, as with perfect competition, the result applies also when the number of production processes must be discrete, thus, overcoming the so-called integer problem. When competition is imperfect, there is only convergence toward the AK model for large enough input use, so an economy is more prone to stalling in a steady state without growth, the smaller and less competitive it is.

Keywords

Endogenous Economic GrowthAK modelReplicationReturns to ScaleInteger Problem
Type
Articles
Information
Macroeconomic Dynamics , Volume 22 , Issue 8 , December 2018 , pp. 2182 - 2200
Copyright
Copyright © Cambridge University Press 2017 

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