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Life Cycle Savings, Bequest, and the Diminishing Impact of Scale on Growth

Carl-Johan Dalgaard () and Martin Jensen ()

No 07-17, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: There appears to be ample evidence that the size of population acted as a stimulus to growth in historical times; scale mattered. In the post World War II era, however, there is little evidence of such scale effects on growth. Where did the scale effect go? The present paper shows that the savings motive critically affects the size and sign of scale effects in standard endogenous growth models. If the bequest motive dominates, the scale effect is positive. If the life cycle motive dominates, the scale effect is ambiguous and may be negative. A declining importance of bequest in capital accumulation could therefore be one reason why scale seems to matter less today than in historical times.

Keywords: overlapping generations; endogenous growth; scale effects (search for similar items in EconPapers)
JEL-codes: O41 O57 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2007-08
New Economics Papers: this item is included in nep-dev and nep-his
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Citations: View citations in EconPapers (9) Track citations by RSS feed

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Related works:
Journal Article: Life-cycle savings, bequest, and a diminishing impact of scale on growth (2009) Downloads
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