Divergence in Economic Performance: Transitional Dynamics with Multiple Equilibria
AbstractSpecial pairs of the utility functions and the production functions are used in this paper to uncover the transitional dynamics in a Lucas model of growth. The main findings are as follows: A continuum of equilibria exists if the external effect of human capital in goods production is sufficiently large. The process of lagging behind, catching up with, and overtaking that we often observe in the world economy can be explained. Finally, some equilibrium paths are shown to have such complicated patterns that the dynamics conjectured by Lucas are too simple to be correct.
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Bibliographic InfoPaper provided by EconWPA in its series GE, Growth, Math methods with number 0210002.
Length: 20 pages
Date of creation: 07 Oct 2002
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Transitional Dynamics; Multiple Equilibria; Lucas Model;
Other versions of this item:
- Xie Danyang, 1994. "Divergence in Economic Performance: Transitional Dynamics with Multiple Equilibria," Journal of Economic Theory, Elsevier, vol. 63(1), pages 97-112, June.
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
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