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Uniqueness and Determinacy of the Romer (1990) Model

Author

Listed:
  • Rongsheng Tang

    (Institute for Advanced Research, Shanghai University of Finance and Economics. Key Laboratory of Mathematical Economics (SUFE), Ministry of Education)

  • Gaowang Wang

    (Center for Economic Research, Shandong University)

  • Jin Wang

    (Guanghua School of Management, Peking University)

Abstract

Romer (1990) solves a steady state (or balanced growth path) of his famous model by a smart conjecture and the proof of uniqueness and the saddle-point stability is examined under a simplified version (Arnold, 2000a, 2000b). Our paper provides a proof in the full model with the method of reduction of dimensionality. Moreover, we introduce a set of policy instruments which improve the monopolistic competitive equilibrium allocation up to social optimum.

Suggested Citation

  • Rongsheng Tang & Gaowang Wang & Jin Wang, 2020. "Uniqueness and Determinacy of the Romer (1990) Model," Annals of Economics and Finance, Society for AEF, vol. 21(1), pages 71-83, May.
    • Handle: RePEc:cuf:journl:y:2020:v:21:i:1:tangwangwang
    as

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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. 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.
    4. 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.
    5. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    BGP; Reduction of dimensionality; 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
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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