This project seeks to expand on recent innovations in growth theory and development economics in order to explain different patterns of growth in different countries and time periods. Recent work has addressed this topic but the most important models which have emerged, such as those of Lucas, Romer, or Boyd-Prescott, tend to predict similar behavior for economies with similar initial conditions. They are unable to account for the fact that a variety of countries that look relatively similar at certain points in time (say Canada and Argentina around 1940) look very different economically at later dates. In their own previous work, the principal investigators have given examples of how theories can be developed to explain why economies with similar "initial conditions" follow very different time paths for per capita output. In this proposal they seek to extend their earlier work in order to integrate a theory of endogenous population dynamics with a theory of per capita income determination. Existing growth models suggest that population and (per capita) income dynamics should interact. This proposal sets forth several models that carry on this fruitful line of research. More specifically, the investigators propose to elaborate a dynamical theory of endogenous population growth that is consistent with well-established historical development patterns and helpful in identifying some of the less obvious reasons why some countries grow faster than others over long periods of time. Among the regularities they seek to illuminate are (i) a logistic pattern of population growth in many parts of Europe and Asia over the last four hundred years; (ii) the passage of many successfully developing countries from an early extensive period of economic growth to a later intensive period; (iii) fertility cycles with a period of approximately sixteen years; and (iv) the slowest growth often occurs in the poorest countries. The underlying theory differs from existing literature on endogenous fertility in that children in traditional economies are modelled primarily as factors of production rather than as consumption goods, and the terms of trade are allowed to be set by intra- family bargaining instead of competitive markets. The new models are well designed to answer a rich set of questions, but are still tractable to analyze. Not only are they challenging from the standpoint of growth theory and development economics, but they are also highly policy-relevant. Although other researchers have made little progress on the key issues to date, the work of the investigators is far enough advanced to give promise of a variety of significant results.
