A Critical Investigation of Long-run Preperties of Endogenous Growth Models

This paper presents a critical investigation of long-run properties of endogenous growth models. A growth model is said to have desirable long-run properties when there is a unique steady state with sustained growth and when expressions of the steady state growth rates are robust for changes in values of parameters. It is shown that endogenous growth models never have the desirable long-run properties, whereas exogenous growth model do have them. These results reinforce the argument of Solow’s skepticism about new growth theory and establish that the Solow model is still the standard model of economic growth