Endogenous Growth

Suppose that output is a linear and strictly increasing function of two inputs, labour and physical capital. The capital stock varies over time according to a rule in which investment equals a fixed proportion of income, minus depreciation. In a model of this kind

as the economy grows, net investment tends to zero owing to the increase in depreciation costs
an equilibrium level of per capita income exists, and growth will take place until this is reached
income will grow forever
per capita income will be constant over time

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