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 of differentiated consumption goods and the range of specialized producer 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 integrated. I also argue that this feature is important in explaining the observed cross-country diversity in growth performance and saving behavior.