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Four Models of Knowledge Diffusion and Growth

Working Paper 724 | Published May 26, 2015

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Erzo G.J. Luttmer Visiting Scholar
Four Models of Knowledge Diffusion and Growth


This paper describes how long-run growth emerges in four closely related models that combine individual discovery with some form of social learning. In a large economy, there is a continuum of long-run growth rates and associated stationary distributions when it is possible to learn from individuals in the right tail of the productivity distribution. What happens in the long run depends on initial conditions. Two distinct literatures, one on reaction-diffusion equations, and another on quasi-stationary distributions suggest a unique long-run outcome when the initial productivity distribution has bounded support.