one compares to classical and new theory, one compares to endogenous growth thoery… so are there total of 4 growth theory? Neoclassical Growth Theory in Equity in Economics - Technology changes increase saving and investment, capital/labour to increase. w/o it, no long-term growth in real GDP - Believes technology growth decrease both birth / death rate (healthcare improvement) - Technology drive economic growth, but not influenced by it - Believe that economic growth will decline if and only if technology stops advancing. Unlike classical, no population growth to slow down the economic growth - Primary reason is real interest rate decline because diminish return in investment - target rate of return is a factor to consider Neoclassical Growth Theory in Equity Diminishing Margin Productivity of Capital - Eventually reach LR steady state not affected by country’s saving rate; higher level of income from higher level of savings; increase in saving (in developing country) will increase dividend but not LR dividend growth
new growth theory in SS4 is same as endogenous growth model.