More rapid capital accumulation by itself cannot result in a permanently higher rate of per capita growth. Permanently higher growth in per capita output requires progress in total factor productivity (TFP), which requires new, innovative products and processes.
This comment is most consistent with which economic growth model?
neoclassical
The answer is Endogenous Growth Theory from Topic Test. I also think it should be neoclassical.
I think PERMANENTLY higher growth can happen only in endogenous. In neoclassical it will eventually stop, I think this is the key for this question.
But in neoclassical, capital growth can not achieve permanently growth in output per capita because of diminishing marginal return. But technological progress can achieve permanently growth in output per capita.
Yes I see what you mean, I don’t know whether you have cited the whole text of the question and from what source it was (CFAI or 3dr party).
What I was saying (knowing that the answer was endogenous) I think the key was the word permanent. Because in neoclassical the growth by capital deepening will stop at a steady state growth level and above that only TFP can induce growth, but TFP is considered exogenous (and not endogenous) and it is not elaborated too much by the neoclassical guys.
But yeah the question is a bit vague.
It is from the last topic test of economics. But it says “More rapid capital accumulation by itself cannot result in a permanently higher rate of per capita growth”. But according to endogenous growth model, capital accumulation can result in a permanently higher rate of per capita growth as long as you invest in information, computer and telecommunication capital. According to the formula y=ck, endogenous growth model does not have diminishing marginal return of capital.
Yes I have looked at it. And I see your point. For me (not an economist) the word permanent growth was key in suggesting this should be under endogenous so I did not overthink the question.