Economic Growth Models

Orlando Gomes

Chapter Chapter 3 in Intertemporal and Strategic Modelling in Economics, 2022, pp 53-82 from Springer

Abstract: Abstract The dynamic approach to decision-making is particularly well-suited to address economic growth. Typically, in optimal growth models a social planner merges the behavior of two other agents acting in a decentralized economy: the household, who maximizes intertemporal consumption utility (as approached in Chap. 1 ); and the firm, which solves a straightforward profit maximization problem. The first step in this chapter is the characterization of the behavior of the representative firm. Once this is done, growth is analyzed, first assuming exogenous savings and, in a second step, fully integrating the intertemporal choice of the household into the model. A few other features are explored later in the chapter, namely the dynamics of investment and a specific class of growth models known as models of overlapping generations.

Date: 2022
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DOI: 10.1007/978-3-031-09600-6_3

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