Simplified Version of the Endogenous Growth Model of Romer (1990)

In this video, I present a highly simplified version of the endogenous growth model of Romer (1990). This version abstracts from many of the complications of the full model but nevertheless preserves crucial insights. I derive the endogenous long-run balanced growth rate and discuss how it depends on parameters and governmental policies. Finally, I discuss the strong scale effect that is implied by the model and its empirical validity.
For a more complex three-sector version of the model that contains the dynamic consumption-saving choice of households and the monopolistic competition structure in the intermediate goods sector, please see:
• Endogenous Growth Mode...
and
• Endogenous Growth Mode...

[@anugrahabasanth1801]

The video was really helpful. Thank you Sir for explaining the model in such a simple manner.

[@KlausPrettner]

Thank you very much for your positive feedback! I am happy that the video was helpful.

[@torge1840]

Richtig gut erklärt!

[@KlausPrettner]

Vielen Dank!