Economic Possibilities for the Grandchildern of John Maynard Keynes
This paper explores the impact of insatiable needs on the sustainability and the direction of technological change and economic growth. In a simple framework it is shown that growth can only be sustained if either the opportunity costs of research are small at low levels of research or if some needs are insatiable. The first source of sustained growth (low opportunity cost of research) also enhances an efficient spread of growth over different technologies and commodities, while the second (insatiable needs) typically induces the `wrong kind' of growth. In connexion with Keynes' essay `On the Economic Possibilities of our Grandchildren' , we consider relative needs as the main source of insatiability of needs.
Endogenous growth, sources of sustained growth, direction of growth, relative needs.
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