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Economic growth and multiple equilibria: A critical note

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  • Gaspar, J.
  • Vasconcelos, P.B.
  • Afonso, O.

Abstract

Recent literature on economic growth points towards the possibility of the existence of multiple equilibria, under certain conditions. In this paper we use a growth model with a public health infrastructure to analyze, in detail, its local dynamics. The discussion of the existence of equilibria in the model reveals that some candidates for equilibria turn out to be non-relevant and are therefore ruled out. Indeed, multiple equilibria may only arise under restrictive parameter values, meaning that the so called “growth miracles” in some literature may be less likely to occur. Numerical computations illustrate that each relevant equilibrium exhibits local saddle-path stability.

Suggested Citation

  • Gaspar, J. & Vasconcelos, P.B. & Afonso, O., 2014. "Economic growth and multiple equilibria: A critical note," Economic Modelling, Elsevier, vol. 36(C), pages 157-160.
    • Handle: RePEc:eee:ecmode:v:36:y:2014:i:c:p:157-160
    DOI: 10.1016/j.econmod.2013.09.037
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    References listed on IDEAS

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    1. Hosoya, Kei, 2012. "Growth and multiple equilibria: A unique local dynamics," Economic Modelling, Elsevier, vol. 29(5), pages 1662-1665.
    2. Park, Hyun & Philippopoulos, Apostolis, 2004. "Indeterminacy and fiscal policies in a growing economy," Journal of Economic Dynamics and Control, Elsevier, vol. 28(4), pages 645-660, January.
    3. Perez, Rafaela & Ruiz, Jesus, 2007. "Global and local indeterminacy and optimal environmental public policies in an economy with public abatement activities," Economic Modelling, Elsevier, vol. 24(3), pages 431-452, May.
    4. Alonso-Carrera, Jaime & Freire-Seren, Maria Jesus, 2004. "Multiple equilibria, fiscal policy, and human capital accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 28(4), pages 841-856, January.
    5. Alfred Greiner, 2003. "On the dynamics of an endogenous growth model with learning by doing," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(1), pages 205-214, January.
    6. Michele Boldrin & Been-Lon Chen & Ping Wang (ed.), 2004. "Human Capital, Trade and Public Policy in Rapidly Growing Economies," Books, Edward Elgar Publishing, number 3470.
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    Cited by:

    1. Hosoya, Kei, 2014. "Public health infrastructure and growth: Ways to improve the inferior equilibrium under multiple equilibria," Research in Economics, Elsevier, vol. 68(3), pages 194-207.
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    6. José Gaspar & Liliana Garrido-da-Silva & Paulo B. Vasconcelos & Óscar Afonso, 2023. "Local and global indeterminacy and transition dynamics in a growth model with public goods," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(2), pages 271-314, May.

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