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Introduction to Modern Economic Growth In this light, the Solow growth model is most useful for us as a framework laying out the general issues and questions It emphasizes that to understand growth, we have to understand physical capital accumulation (and human capital accumulation, which will be discussed in the next chapter) and perhaps most importantly, technological progress All of these are black boxes in the Solow growth model Therefore, much of what we will in the rest of the book will be to dig deeper and understand what lies in these black boxes We start by introducing consumer optimization in Chapter 8, so that we can talk about capital accumulation more systematically Then we will turn to models in which human capital I can relation and technological progress are endogenous A framework in which the rate of accumulation of factors of production and technology are endogenous gives us a framework for posing an answering questions related to the fundamental causes of economic growth Nevertheless, we will also see that even in its bare-bones form the Solow model is useful in helping us think about the world and bringing useful perspectives, especially related to the proximate causes of economic growth This is the topic of the next chapter 2.9 References and Literature The model analyzed in this chapter was first developed in Solow (1956) and Swan (1956) Solow (1970) gives a nice and accessible treatment, with historical references Barro and Sala-i-Martin’s (2004, Chapter 1) textbook presents a more up-to-date treatment of the basic Solow model at the graduate level, while Jones (1998, Chapter 2) presents an excellent undergraduate treatment The treatment in the chapter made frequent references to basic consumer and general equilibrium theory These are prerequisites for an adequate understanding of the theory of economic growth Mas-Colell, Whinston and Green’s (1995) graduate microeconomics theory textbook contains an excellent treatment of all of the necessary material, including basic producer theory and an accessible presentation of the basic notions of general equilibrium theory, including a discussion of Arrow securities and the definition of Arrow-Debreu commodities A good understanding of basic general equilibrium is essential for the study of both the material in this 95