Economic Quarterly

1996

 

Fall 1996

Neoclassical vs. Endogenous Growth Analysis: An Overview

Bennett T. McCallum

The traditional neoclassical theory of economic growth is rich analytically but fails to provide any explanation of steady-state growth in per capita values of output or consumption and cannot plausibly explain actual cross-country growth differences as transitional episodes. Consequently, several types of endogenous growth models, which attempt to account for ongoing per capita growth, have been developed. The likelihood of strictly justifying steady-state growth with any of these is very small, but their insights and predictions appear to be valuable nevertheless.

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