The economics of growth / Aghion Philippe, Howitt Peter

Includes bibliographical references (p. [457]-475) and index.

pt. 1. Basic paradigms of growth theory -- Neoclassical Growth Theory -- The AK model -- Product variety -- The Schumpeterian model -- Capital, innovation, and growth accounting -- pt. 2. Understanding the growth process -- Finance and growth -- Technology transfer and cross-country convergence -- Market size and directed technical change -- General-purpose technologies -- Stages of growth -- Institutions and nonconvergence traps -- pt. 3. Growth policy -- Fostering competition and entry -- Investing in education -- Reducing volatility and risk -- Liberalizing trade -- Preserving the environment -- Promoting democracy -- Looking ahead: Culture and development -- Appendix: Basic elements of econometrics -- A.1. The simple regression model -- A.2. The ordinary least squares estimator -- A.3. Multiple regression analysis -- A.4. Inference and hypothesis testing -- A.5. How to deal with the endogeneity problem -- A.6. Fixed-effects regressions -- A.7. Reading a regression table.

This comprehensive introduction to economic growth presents the main facts and puzzles about growth, and proposes simple methods and models needed to explain these facts. It acquaints the reader with the most recent theoretical and empirical developments, and provides tools with which to analyze policy design. The treatment of growth theory is fully accessible to students with a background no more advanced than elementary calculus and probability theory; the reader need not master all the subtleties of dynamic programming and stochastic processes to learn what is essential about such issues as cross-country convergence, the effects of financial development on growth, and the consequences of globalization. The book, which grew out of courses taught by the authors at Harvard and Brown universities, can be used both by advanced undergraduate and graduate students, and as a reference for professional economists in government or international financial organizations. The Economics of Growth first presents the main growth paradigms: the neoclassical model, the AK model, Romer's product variety model, and the Schumpeterian model. The text then builds on the main paradigms to shed light on the dynamic process of growth and development, discussing such topics as club convergence, directed technical change, the transition from Malthusian stagnation to sustained growth, general purpose technologies. It also discusses the recent debate over institutions versus human capital as the primary factor in cross-country income differences. Finally, the book focuses on growth policies — analyzing the effects of liberalizing market competition and entry, education policy, trade liberalization, environmental and resource constraints, and stabilization policy — and the methodology of growth policy design.

Bibliography from B1 Economics for Managers