Endogenous Growth and Entropy

Resumo/Abstract: We devise an endogenous growth model using the concept of entropy as a complexity effect. This allows us to gradually diminish scale effects as the economy develops along the transitional dynamics, which conciliates evidence on the existence of scale effects in history with evidence for no or reduced scale effects in today’s economies. We show that empirical evidence supports entropy as a “first principle” operator of the complexity effect. By focusing on the asymptotic properties of the knowledge production function, the model features endogenous growth with positive, null or negative scale effects or “stagnation”. Then, we show that the model can replicate well the take-off after the industrial revolution and the productivity slowdown in the second half of the XXth century. Future scenarios based on in-sample calibration may help to explain (part of) the growth crises affecting the current generation.

Keywords: endogenous economic growth, complexity effects, entropy.

JEL Classification: O10, O30, O40, E2

Outros seminários / Other seminars: Programa completo / Full programme.