Economic Growth Model of Endogenous Institutions: Construction and Deduction

摘要

Through the deduction of the endogenous institutions model, we can conclude as follows:Firstly, institutional innovation influences the economic growth in a country importantly. In the balanced growth path, the growth rate of average output per worker depends on the sum of the institutional innovation rate and technological progress rate, namely gY=gI+g. Thus, the improvement of institutional innovation rate can increase significantly the economic growth rate, thereby affecting the long-term economic growth.