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Endogenous technological change: a note on stability

Author

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  • Lutz G. Arnold

    (Department of Economics, University of Dortmund, Vogelpothsweg 87, D-44227 Dortmund, GERMANY)

Abstract

This paper demonstrates that the steady-state solution of the optimal-growth problem in Romer's (1990) model of endogenous technological change is globally saddle-point stable. Surprisingly, the proof of this result is trivial. Interest in the optimal growth path is justified by the fact that there is a (unique) combination of production and R&D subsidies by means of which the optimal growth path is attained as a market equilibrium.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:joecth:v:16:y:2000:i:1:p:219-226
    Note: Received: October 6, 1998; revised version: April 19, 1999
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    More about this item

    Keywords

    R&D; Endogenous growth; Saddle-point stability; Transitional dynamics.;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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