In the Romer model, with decreasing returns to the knowledge sector:

Question

Quizplus · Accepted Answer

In the Romer model, even with decreasing returns in the knowledge sector, adding more researchers leads to the production of more ideas. These ideas, in turn, increase the stock of knowledge, which raises the long-run level of per capita income. The model suggests that while the growth rate may eventually stabilize due to diminishing returns, the level of income can continue to increase with the accumulation of knowledge.

In the Romer Model, with Decreasing Returns to the Knowledge