Models of endogenous growth assume that private investment in either physical or human capital yields positive externalities to production possibilities as a whole. But what is the structure of such externalities? We present a model of 'learning by watching'which implies a nonlinear relationship...

Models in which the growth rate is exogenous provide no role for government in determining growth. In our model, growth is associated with investment, through externalities from "learning by watching," rather than with the level of the capital stock. Presumption of a technical progress function...

This article investigates why, in October 1987, almost all stock markets fell together despite widely differing economic circumstances. The authors construct a model in which "contagion" between markets occurs as a result of attempts by rational agents to infer information from price changes in...