Romer Meets Weber-Schumpeter: The Spirit of Capitalism, Entrepreneurial Drive and Long-Run Growth

Gaowang Wang and Heng-Fu Zou ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this article, we develop a growth theory by integrating the Weber-Schumpeterian spirit of capitalism into Romer's (1990) model of endogenous technological change. The spirit of capitalism influences innovation and long-run growth through capital accumulation and the reallocation of human capital, mediated by a price mechanism. It also helps prevent economic stagnation arising from a limited stock of human capital. Explicit solutions illustrate the qualitative effects of the spirit of capitalism on growth. Using calibrated parameters based on U.S. data, we find this effect is quantitatively significant, accounting for more than half of U.S. long-run growth.

Keywords: Weber's Spirit of Capitalism; Schumpeter's entrepreneurial psychology; Endogenous Growth; Economic Stagnation; Heterogeneous Ability (search for similar items in EconPapers)
JEL-codes: E1 O3 O4 (search for similar items in EconPapers)
Date: 2025-10-18
New Economics Papers: this item is included in nep-ent, nep-gro, nep-his, nep-hme and nep-sbm
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