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On the transitional dynamics and policy analysis of the Romer (1990) model

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Listed:
  • Tang, Rongsheng
  • Wang, Gaowang
  • Wang, Jin

Abstract

In this paper we prove the existence, uniqueness and saddle-point stability of the steady state (or balanced growth path) of the Romer (1990) model by utilizing the reduction of dimensionality. Furthermore, we found out a set of policy instruments to improve the monopolistic competitive equilibrium allocation up to social optimum.

Suggested Citation

  • Tang, Rongsheng & Wang, Gaowang & Wang, Jin, 2019. "On the transitional dynamics and policy analysis of the Romer (1990) model," MPRA Paper 96132, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:96132
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    File URL: https://mpra.ub.uni-muenchen.de/96247/1/MPRA_paper_96247.pdf
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    References listed on IDEAS

    as
    1. Benhabib Jess & Perli Roberto, 1994. "Uniqueness and Indeterminacy: On the Dynamics of Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 63(1), pages 113-142, June.
    2. Lutz G. Arnold, 2000. "Endogenous technological change: a note on stability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(1), pages 219-226.
    3. Casey B. Mulligan & Xavier Sala-i-Martin, 1993. "Transitional Dynamics in Two-Sector Models of Endogenous Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 739-773.
    4. Asada, Toichiro & Semmler, Willi & Novak, Andreas J., 1998. "Endogenous growth and the balanced growth equilibrium," Research in Economics, Elsevier, vol. 52(2), pages 189-212, June.
    5. Arnold, Lutz G., 2000. "Stability of the Market Equilibrium in Romer's Model of Endogenous Technological Change: A Complete Characterization," Journal of Macroeconomics, Elsevier, vol. 22(1), pages 69-84, January.
    6. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
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    More about this item

    Keywords

    BGP; Reduction of Dimensionalty; Social Optimum.;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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