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Transitional Dynamics Of An Endogenous Growth Model With An Erosion Effect

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  • TIAGO NEVES SEQUEIRA

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.

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  • Tiago Neves Sequeira, 2008. "Transitional Dynamics Of An Endogenous Growth Model With An Erosion Effect," Manchester School, University of Manchester, vol. 76(4), pages 436-452, July.
    • Handle: RePEc:bla:manchs:v:76:y:2008:i:4:p:436-452
    DOI: 10.1111/j.1467-9957.2008.01068.x
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    Cited by:

    1. George, Donald A R, 2011. "Stability of Growth Models with Generalised Lag Structures," SIRE Discussion Papers 2011-63, Scottish Institute for Research in Economics (SIRE).
    2. Sequeira Tiago Neves & Ferreira-Lopes Alexandra & Gomes Orlando, 2014. "A growth model with qualities, varieties, and human capital: stability and transitional dynamics," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 18(5), pages 543-555, December.
    3. Donald A R George, 2011. "Stability of Growth Models with Generalised Lag Structures," Edinburgh School of Economics Discussion Paper Series 205, Edinburgh School of Economics, University of Edinburgh.
    4. Chen, Xi & Funke, Michael, 2013. "The dynamics of catch-up and skill and technology upgrading in China," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 465-480.
    5. repec:zbw:bofitp:2012_013 is not listed on IDEAS
    6. Constantin Chilarescu & Ioana Viasu, 2013. "A Model of Endogenous Growth: The Case of an Innovative Economy," Post-Print hal-02397413, HAL.
    7. Manuel A. Gómez, 2012. "Equilibrium Dynamics Of An Endogenous Growth Model With An Erosion Effect And Duplication In R&D," Manchester School, University of Manchester, vol. 80(6), pages 700-717, December.
    8. Ibtissem Aribi & Lobna Ben Hassen, 2021. "Phases Of Economic Development In An Endogenous Growth Model With Innovation And Education," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 6(2), pages 78-87, September.

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    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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