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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.

Suggested Citation

  • García-Belenguer, Fernando, 2006. "Stability, Global Dynamics and Markov Equilibrium in Models of Economic Growth," Working Papers in Economic Theory 2006/05, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    • Handle: RePEc:uam:wpaper:200605
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    References listed on IDEAS

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    More about this item

    Keywords

    competitive equilibrium; stability; Markov equilibrium; externalities; taxes;
    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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