Rodolfo Manuelli, Ananth Seshadri

In this paper we make a (very) preliminary assessment of the ability of a version of the neoclassical growth model to explain episodes of fast growth, as well as instances of economic stagnation. The model that we study features individuals who are finitely lived but care about their descendants, albeit in an imperfect way. There are two capital stocks: physical and human capital. The key difference between them is that the latter completely depreciates when an individual dies. This, in turn, implies that our setup is not a special case of the infinitely lived version.