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Absorption in Human Capital and R&D Effects in an Endogenous Growth Model

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Sequeira, Tiago Neves

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Abstract

Until now, in models of endogenous growth with physical capital, human capital and R&D such as in Arnold [Journal of Macroeconomics 20 (1998)] and followers, steady-state growth is independent of innovation activities. We introduce absorption in human capital accumulation and describe the steady-state and transition of the model. We show that this new feature provides an effect of R&D in growth, consumption and welfare. We compare the quantitative effects of R&D productivity with the quantitative effects of Human Capital productivity in wealth and welfare.

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Paper provided by Universidade Nova de Lisboa, Faculdade de Economia in its series FEUNL Working Paper Series with number wp507.

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Length: 24 pages
Date of creation: 2007
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Handle: RePEc:unl:unlfep:wp507

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