10 December 2006

New Growth Theory

I am currently enjoying reading "Knowledge and the Wealth of Nations: A Story of Economic Discovery" by David Warsh who writes the online newsletter Economic Principals. The book is about endogenous growth theory, an important breakthrough in economic theory. It backgrounds the work of Paul Romer to internalise technological change in how economists explain economic growth.

Those who follow the development of the airline industry will appreciate how technological change has lead to a massive reduction in the cost and price of air travel over the years.

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