Endogenous Technology,Long-run Economic Growth and Fiscal & Taxation Policy Choice

According to neoclassical economic theories,it is an enviable trend for a nation's economic growth to reach stable equilibrium and zero growth due to the diminishing marginal profit and constant factor hypothesis.Endogenous growth theory,however,indicates that owing to the steady accumulation of such endogenous factors as human capital,knowledge stock,production public capital,and research and development,the long-run economic growth will not result in the consequence as predicted by neoclassical economic theories.Instead,the appropriate fiscal policies will play a major role in a nation's economic growth.In order to maintain the sustainable long-run economic growth,China has to adopt effective fiscal and taxation policies as well as expedite human capital accumulation and stimulate technological progress by increasing the investment in human capital,production public capital in addition to research and development.