AN ENDOGENOUS GROWTH-MODEL WITH EXPANDING RANGES OF CONSUMER-GOODS AND PRODUCER DURABLES

This paper constructs a growth model with the feature that the range o f differentiated consumption goods and the range of specialized produc er durables are both endogenously determined. I show that this feature allows the domestic investment rate to be closely associated with the domestic saving rate even when international financial markets are in tegrated. I also argue that this feature is important in explaining th e observed cross-country diversity in growth performance and saving be havior.