From Solow to Romer: Teaching Endogenous Technological Change in Undergraduate Economics

Angus Chu

MPRA Paper from University Library of Munich, Germany

Abstract: Undergraduate students learn economic growth theory through the seminal Solow model, which takes the growth rate of technology as given. To understand the origin of technological progress, we need a model of endogenous technological change. The Romer model fills this important gap in the literature. However, given its complexity, undergraduate students often find the Romer model difficult. This paper proposes a simple method of teaching the Romer model. We add three layers of structure (one at a time) to extend the familiar Solow model into the less familiar Romer model. First, we incorporate a competitive market structure into the Solow model. Then, we modify the competitive market structure into a monopolistic market structure. Finally, we introduce an R&D sector that creates inventions.

Keywords: economic growth; endogenous technological change; the Romer model (search for similar items in EconPapers)
JEL-codes: A22 O3 (search for similar items in EconPapers)
Date: 2015-03, Revised 2017-10
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https://mpra.ub.uni-muenchen.de/81972/1/MPRA_paper_81972.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/83815/1/MPRA_paper_83815.pdf revised version (application/pdf)

Related works:
Journal Article: From Solow to Romer: Teaching endogenous technological change in undergraduate economics (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:81972

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