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Stability, Global Dynamics and Markov Equilibrium in Models of Economic Growth

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  • García-Belenguer, Fernando

    ()
    (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

Abstract

This paper studies the local and a global dynamics of two-sector models of endogenous growth with economy-wide external effects and taxes on capital and labor. The local analysis classifies the parameter space depending on the number of stationary solutions and local stability of equilibria. Taxes on labor and subsidies to education may determine the existence of poverty traps and indeterminacy. The global analysis shows that if externalities and taxes are not too big then the equilibrium path is monotone and therefore a continuous Markov equilibrium can be defined.

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Bibliographic Info

Paper provided by Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History) in its series Working Papers in Economic Theory with number 2006/05.

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Length: 47 pages
Date of creation: Mar 2006
Date of revision:
Handle: RePEc:uam:wpaper:200605

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Keywords: competitive equilibrium; stability; Markov equilibrium; externalities; taxes;

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  1. Manuel Santos & Salvador Ortigueira, . "Equilibrium Dynamics in a Two-Sector Model with Taxes," Working Papers 2133332, Department of Economics, W. P. Carey School of Business, Arizona State University.
  2. Manjira Datta & Leonard Mirman & Kevin Reffett, . "Existence and Uniqueness of Equilibrium in Distorted Dynamic Economies with Capital and Labor," Working Papers 2132846, Department of Economics, W. P. Carey School of Business, Arizona State University.
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  18. Ben-Gad, Michael, 2003. "Fiscal policy and indeterminacy in models of endogenous growth," Journal of Economic Theory, Elsevier, vol. 108(2), pages 322-344, February.
  19. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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  23. Lucas, Robert E, Jr & Prescott, Edward C, 1971. "Investment Under Uncertainty," Econometrica, Econometric Society, vol. 39(5), pages 659-81, September.
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