Innovation and growth in the Grossman-Helpman’s model with increasing returns: a note

Giulio Guarini ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper I consider the 1991 Grossman-Helpman model which analyses the role of innovation on growth. The model assumes constant returns to scale. I intend to show what happen in this model if I assume strong increasing returns. In particular, under the assumption of increasing returns of capital but leaving all other main features of the Grossman-Helpman model unchanged, I analyse the influence of the rate of innovation on three variables: the rate of growth of final output, the level of prices of final output and the rate of investment.

Keywords: Grossman-Helpman model; growth; innovation; increasing returns to scale (search for similar items in EconPapers)
JEL-codes: D24 O31 (search for similar items in EconPapers)
Date: 2009-12-27
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