THE SOLOW¡¯S MODEL WITH ENDOGENOUS POPULATION: A NEOCLASSICAL GROWTH CYCLE MODEL

Abstract

It is shown here that the Solow (1956) neo-classical growth paradigm not only explains the ¡°first¡± stylised fact of economic growth, namely the existence of a globally stable state of balanced growth, but, once endowed with a demographically founded formulation of the labour supply, is also capable to endogenously explain a second main stylised fact of growth, i.e., the generation of globally stable oscillations around the path of balanced growth.Solow¡¯s Balanced Growth Model, Endogenous Population, Neoclassical Growth-Cycle Model