Cover -- Half title -- Title -- Copyright -- Dedication -- Contents -- Preface -- Part I: Introduction -- Chapter 1 Economic Growth and Economic Development: The Questions -- 1.1 Cross-Country Income Differences -- 1.2 Income and Welfare -- 1.3 Economic Growth and Income Differences -- 1.4 Origins of Today's Income Differences and World Economic Growth -- 1.5 Conditional Convergence -- 1.6 Correlates of Economic Growth -- 1.7 From Correlates to Fundamental Causes -- 1.8 The Agenda -- 1.9 References and Literature -- Chapter 2 The Solow Growth Model -- 2.1 The Economic Environment of the Basic Solow Model -- 2.2 The Solow Model in Discrete Time -- 2.3 Transitional Dynamics in the Discrete-Time Solow Model -- 2.4 The Solow Model in Continuous Time -- 2.5 Transitional Dynamics in the Continuous-Time Solow Model -- 2.6 A First Look at Sustained Growth -- 2.7 Solow Model with Technological Progress -- 2.8 Comparative Dynamics -- 2.9 Taking Stock -- 2.10 References and Literature -- 2.11 Exercises -- Chapter 3 The Solow Model and the Data -- 3.1 Growth Accounting -- 3.2 The Solow Model and Regression Analyses -- 3.3 The Solow Model with Human Capital -- 3.4 Solow Model and Cross-Country Income Differences: Regression Analyses -- 3.5 Calibrating Productivity Differences -- 3.6 Estimating Productivity Differences -- 3.7 Taking Stock -- 3.8 References and Literature -- 3.9 Exercises -- Chapter 4 Fundamental Determinants of Differences in Economic Performance -- 4.1 Proximate versus Fundamental Causes -- 4.2 Economies of Scale, Population, Technology, and World Growth -- 4.3 The Four Fundamental Causes -- 4.4 The Effect of Institutions on Economic Growth -- 4.5 What Types of Institutions? -- 4.6 Disease and Development -- 4.7 Political Economy of Institutions: First Thoughts -- 4.8 Taking Stock -- 4.9 References and Literature -- 4.10 Exercises.

Part II: Toward Neoclassical Growth -- Chapter 5 Foundations of Neoclassical Growth -- 5.1 Preliminaries -- 5.2 The Representative Household -- 5.3 Infinite Planning Horizon -- 5.4 The Representative Firm -- 5.5 Problem Formulation -- 5.6 Welfare Theorems -- 5.7 Proof of the Second Welfare Theorem (Theorem 5.7) * -- 5.8 Sequential Trading -- 5.9 Optimal Growth -- 5.10 Taking Stock -- 5.11 References and Literature -- 5.12 Exercises -- Chapter 6 Infinite-Horizon Optimization and Dynamic Programming -- 6.1 Discrete-Time Infinite-Horizon Optimization -- 6.2 Stationary Dynamic Programming -- 6.3 Stationary Dynamic Programming Theorems -- 6.4 The Contraction Mapping Theorem and Applications * -- 6.5 Proofs of the Main Dynamic Programming Theorems * -- 6.6 Applications of Stationary Dynamic Programming -- 6.7 Nonstationary Infinite-Horizon Optimization -- 6.8 Optimal Growth in Discrete Time -- 6.9 Competitive Equilibrium Growth -- 6.10 Computation -- 6.11 Taking Stock -- 6.12 References and Literature -- 6.13 Exercises -- Chapter 7 An Introduction to the Theory of Optimal Control -- 7.1 Variational Arguments -- 7.2 The Maximum Principle: A First Look -- 7.3 Infinite-Horizon Optimal Control -- 7.4 More on Transversality Conditions -- 7.5 Discounted Infinite-Horizon Optimal Control -- 7.6 Existence of Solutions, Concavity, and Differentiability * -- 7.7 A First Look at Optimal Growth in Continuous Time -- 7.8 The q-Theory of Investment and Saddle-Path Stability -- 7.9 Taking Stock -- 7.10 References and Literature -- 7.11 Exercises -- Part III: Neoclassical Growth -- Chapter 8 The Neoclassical Growth Model -- 8.1 Preferences, Technology, and Demographics -- 8.2 Characterization of Equilibrium -- 8.3 Optimal Growth -- 8.4 Steady-State Equilibrium -- 8.5 Transitional Dynamics and Uniqueness of Equilibrium -- 8.6 Neoclassical Growth in Discrete Time.

8.7 Technological Change and the Canonical Neoclassical Model -- 8.8 The Role of Policy -- 8.9 Comparative Dynamics -- 8.10 A Quantitative Evaluation -- 8.11 Extensions -- 8.12 Taking Stock -- 8.13 References and Literature -- 8.14 Exercises -- Chapter 9 Growth with Overlapping Generations -- 9.1 Problems of Infinity -- 9.2 The Baseline Overlapping Generations Model -- 9.3 The Canonical Overlapping Generations Model -- 9.4 Overaccumulation and Pareto Optimality of Competitive Equilibrium in the Overlapping Generations Model -- 9.5 Role of Social Security in Capital Accumulation -- 9.6 Overlapping Generations with Impure Altruism -- 9.7 Overlapping Generations with Perpetual Youth -- 9.8 Overlapping Generations in Continuous Time -- 9.9 Taking Stock -- 9.10 References and Literature -- 9.11 Exercises -- Chapter 10 Human Capital and Economic Growth -- 10.1 A Simple Separation Theorem -- 10.2 Schooling Investments and Returns to Education -- 10.3 The Ben-Porath Model -- 10.4 Neoclassical Growth with Physical and Human Capital -- 10.5 Capital-Skill Complementarity in an Overlapping Generations Model -- 10.6 Physical and Human Capital with Imperfect Labor Markets -- 10.7 Human Capital Externalities -- 10.8 The Nelson-Phelps Model of Human Capital -- 10.9 Taking Stock -- 10.10 References and Literature -- 10.11 Exercises -- Chapter 11 First-Generation Models of Endogenous Growth -- 11.1 The AK Model Revisited -- 11.2 The AK Model with Physical and Human Capital -- 11.3 The Two-Sector AK Model -- 11.4 Growth with Externalities -- 11.5 Taking Stock -- 11.6 References and Literature -- 11.7 Exercises -- Part IV: Endogenous Technological Change -- Chapter 12 Modeling Technological Change -- 12.1 Different Conceptions of Technology -- 12.2 Science and Profits -- 12.3 The Value of Innovation in Partial Equilibrium.

12.4 The Dixit-Stiglitz Model and Aggregate Demand Externalities -- 12.5 Individual R&amp -- D Uncertainty and the Stock Market -- 12.6 Taking Stock -- 12.7 References and Literature -- 12.8 Exercises -- Chapter 13 Expanding Variety Models -- 13.1 The Lab-Equipment Model of Growth with Input Varieties -- 13.2 Growth with Knowledge Spillovers -- 13.3 Growth without Scale Effects -- 13.4 Growth with Expanding Product Varieties -- 13.5 Taking Stock -- 13.6 References and Literature -- 13.7 Exercises -- Chapter 14 Models of Schumpeterian Growth -- 14.1 A Baseline Model of Schumpeterian Growth -- 14.2 A One-Sector Schumpeterian Growth Model -- 14.3 Innovation by Incumbents and Entrants -- 14.4 Step-by-Step Innovations * -- 14.5 Taking Stock -- 14.6 References and Literature -- 14.7 Exercises -- Chapter 15 Directed Technological Change -- 15.1 Importance of Biased Technological Change -- 15.2 Basics and Definitions -- 15.3 Baseline Model of Directed Technological Change -- 15.4 Directed Technological Change with Knowledge Spillovers -- 15.5 Directed Technological Change without Scale Effects -- 15.6 Endogenous Labor-Augmenting Technological Change -- 15.7 Generalizations and Other Applications -- 15.8 An Alternative Approach to Labor-Augmenting Technological Change* -- 15.9 Taking Stock -- 15.10 References and Literature -- 15.11 Exercises -- Part V: Stochastic Growth -- Chapter 16 Stochastic Dynamic Programming -- 16.1 Dynamic Programming with Expectations -- 16.2 Proofs of the Stochastic Dynamic Programming Theorems * -- 16.3 Stochastic Euler Equations -- 16.4 Generalization to Markov Processes * -- 16.5 Applications of Stochastic Dynamic Programming -- 16.6 Taking Stock -- 16.7 References and Literature -- 16.8 Exercises -- Chapter 17 Stochastic Growth Models -- 17.1 The Brock-Mirman Model -- 17.2 Equilibrium Growth under Uncertainty.

17.3 Application: Real Business Cycle Models -- 17.4 Growth with Incomplete Markets: The Bewley Model -- 17.5 The Overlapping Generations Model with Uncertainty -- 17.6 Risk, Diversification, and Growth -- 17.7 Taking Stock -- 17.8 References and Literature -- 17.9 Exercises -- Part VI: Technology Diffusion, Trade, and Interdependences -- Chapter 18 Diffusion of Technology -- 18.1 Productivity Differences and Technology -- 18.2 A Benchmark Model of Technology Diffusion -- 18.3 Technology Diffusion and Endogenous Growth -- 18.4 Appropriate and Inappropriate Technologies and Productivity Differences -- 18.5 Contracting Institutions and Technology Adoption -- 18.6 Taking Stock -- 18.7 References and Literature -- 18.8 Exercises -- Chapter 19 Trade and Growth -- 19.1 Growth and Financial Capital Flows -- 19.2 Why Does Capital Not Flow from Rich to Poor Countries? -- 19.3 Economic Growth in a Heckscher-Ohlin World -- 19.4 Trade, Specialization, and the World Income Distribution -- 19.5 Trade, Technology Diffusion, and the Product Cycle -- 19.6 Trade and Endogenous Technological Change -- 19.7 Learning-by-Doing, Trade, and Growth -- 19.8 Taking Stock -- 19.9 References and Literature -- 19.10 Exercises -- Part VII: Economic Development and Economic Growth -- Chapter 20 Structural Change and Economic Growth -- 20.1 Nonbalanced Growth: The Demand Side -- 20.2 Nonbalanced Growth: The Supply Side -- 20.3 Agricultural Productivity and Industrialization -- 20.4 Taking Stock -- 20.5 References and Literature -- 20.6 Exercises -- Chapter 21 Structural Transformations and Market Failures in Development -- 21.1 Financial Development -- 21.2 Fertility, Mortality, and the Demographic Transition -- 21.3 Migration, Urbanization, and the Dual Economy -- 21.4 Distance to the Frontier and Changes in the Organization of Production.

21.5 Multiple Equilibria from Aggregate Demand Externalities and the Big Push.

Introduction to Modern Economic Growth is a groundbreaking text from one of today's leading economists. Daron Acemoglu gives graduate students not only the tools to analyze growth and related macroeconomic problems, but also the broad perspective needed to apply those tools to the big-picture questions of growth and divergence. And he introduces the economic and mathematical foundations of modern growth theory and macroeconomics in a rigorous but easy to follow manner. After covering the necessary background on dynamic general equilibrium and dynamic optimization, the book presents the basic workhorse models of growth and takes students to the frontier areas of growth theory, including models of human capital, endogenous technological change, technology transfer, international trade, economic development, and political economy. The book integrates these theories with data and shows how theoretical approaches can lead to better perspectives on the fundamental causes of economic growth and the wealth of nations. Innovative and authoritative, this book is likely to shape how economic growth is taught and learned for years to come. Introduces all the foundations for understanding economic growth and dynamic macroeconomic analysis Focuses on the big-picture questions of economic growth Provides mathematical foundations Presents dynamic general equilibrium Covers models such as basic Solow, neoclassical growth, and overlapping generations, as well as models of endogenous technology and international linkages Addresses frontier research areas such as international linkages, international trade, political economy, and economic development and structural change An accompanying Student Solutions Manual containing the answers to selected exercises is available (978-0-691-14163-3/24.95). See: http://press.princeton.edu/titles/8970.html. For

Professors only: To access a complete solutions manual online, email us at: acemoglusolutions@press.princeton.edu.

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