Definition of New Growth Theory

Definition: New growth theory studies economic growth. Called 'new' because unlike previous attempts to model the phenomenon, the new theories treat knowledge as at least partly endogenous. R&D is one path. Hulten (2000) says that the new growth theories have the new assumption that the marginal product of capital is constant rather than in diminishing as in the neoclassical theories of growth. Capital often in the new growth models includes investments in knowledge, research and development of products, and human capital.

Terms related to New Growth Theory:

• Real Business Cycle
• Business Cycle Frequency
• Unemployment

About.Com Resources on New Growth Theory:

• What is the Business Cycle?
• A Beginner's Guide to Economic Indicators
• Recession? Depression? What's the difference?

Writing a Term Paper? Here are a few starting points for research on New Growth Theory:

Journal Articles on New Growth Theory:

• How new is new growth theory?
• The new growth theory and development economics: A survey
• The New Growth Theory and Coasean economics