On the Dynamics of Basic Growth Models: Ratio Stability vs. Convergence and Divergence in State Space
We show for a class of basic growth models that convergence in ratios does not imply the pathwise convergence to the corresponding balanced growth path in the state space. We derive conditions on parameters and on the elasticity of the savings function for convergence or divergence and apply our results to the Solow model, an augmented Solow model as well as to an optimal growth model. An implication for the convergence debate is that two economies that differ only in the initial capital stock and converge in per capita terms might diverge to infinity in absolute terms. Copyright 2009 The Author. Journal Compilation Verein für Socialpolitik and Blackwell Publishing Ltd.
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Volume (Year): 10 (2009)
Issue (Month): (November)
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jan Wenzelburger & Volker Böhm & Thorsten Pampel, 2007. "On the Stability of Balanced Growth," Keele Economics Research Papers KERP 2007/09, Centre for Economic Research, Keele University.
- Galor, Oded, 1996.
"Convergence? Inferences from Theoretical Models,"
CEPR Discussion Papers
1350, C.E.P.R. Discussion Papers.
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