This survey reviews the literature on firm dynamics, innovation and growth aiming to better understand the main channels through which innovation affects the performance of modern economies. Since innovations fundamentally diffuse through a complex process of firm and product creation and...

We show that the two-sector version of the AK model proposed by Rebelo (1991) can be read as an endogenous growth extension of Greenwood, Hercowitz and Krusell (1997). By confining constant returns to capital to the investment goods sector, the model generates endogenously the secular downward...