Transitional dynamics of an endogenous growth model with an erosion effect

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4 Citations (Scopus)

Abstract

The convergence features of an endogenous growth model with physical capital, human capital and R&D have been studied. We add an erosion effect (supported by empirical evidence) to this model, and fully characterize its convergence properties. The dynamics is described by a fourth-order system of differential equations. We show that the model converges along a one-dimensional stable manifold and that its equilibrium is saddle-path stable, for most plausible values for the parameters. We also argue that one of the implications of considering this 'erosion effect' is the increase in the adherence of the model to data.
Original languageEnglish
Pages (from-to)436-452
JournalManchester School
Volume76
Issue number4
DOIs
Publication statusPublished - 1 Jan 2008

Keywords

  • RESEARCH-AND-DEVELOPMENT
  • ECONOMIC-GROWTH
  • PRODUCT VARIETY
  • TECHNOLOGY

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