Stability in a Three-Sector Dynamic Growth Model with Endogenous Labor Supply
AbstractThis paper explores the stability of the stationary state for a dynamic growth model with wealth and human capital accumulation. Knowledge is created through research and learning-by-doing, while the time allocation between labor and leisure is endogenized. We analyze the model in both its deterministic and stochastic versions. First, we describe the deterministic model and analyze the stationary state. Second, using the stationary state, we defi…ne the stochastic perturbation and study the mean and squared mean values of the system states for the linearized model. Third, we prove that for certain parameters, the stationary state is asymptotically stable both in the deterministic and the stochastic model. Finally, we perform the comparative dynamic analysis for the propensities to save and to enjoy leisure, the tax rates used to finance research, and the knowledge utilization efficiency.
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Bibliographic InfoPaper provided by School of Economics, The University of New South Wales in its series Discussion Papers with number 2012-10.
Length: 22 pages
Date of creation: Oct 2011
Date of revision:
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More information through EDIRC
labor; human capital; capital accumulation; economic growth.;
Find related papers by JEL classification:
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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