Summary
We present an overlapping generations model of endogenous fertility and growth. The cost of child rearing and the effect of population size on total factor productivity determine the dynamics of competitive equilibrium path of our model. The non-linear dynamics of the model generates a plethora of outcomes (depending on the functional forms, parameters and initial conditions) that include not only the neo-classical steady state with exponential growth of population with constant per capita income and consumption, but also growth paths which do not converge to a steady state and are even chaotic. Exponential, and even super exponential, growth of per capita output are possible in some cases.
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We would like to thank Mukul Majumdar, Kazuo Nishimura and an anonymous referee for many comments.
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Raut, L.K., Srinivasan, T.N. Dynamics of endogenous growth. Econ Theory 4, 777–790 (1994). https://doi.org/10.1007/BF01212030
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DOI: https://doi.org/10.1007/BF01212030