IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

The Transitional Dynamics of an Endogenous Growth Model: Generalizing Production Functions

Author Info

Listed author(s):
  • Gómez Manuel A.

    ()

    (University of A Coruña)

  • Sequeira Tiago Neves

    ()

    (Universidade da Beira Interior (DGE and CEFAGE-UBI) and Universidade Nova de Lisboa (INOVA))

Abstract

This paper devises a class of endogenous growth models with physical capital, human capital and product varieties. Unlike previous literature, we introduce a general specification of production that allows for disentangling the gains from specialization from the monopolistic markup. The consequences of separating both parameters on the equilibrium dynamics of the model are analyzed. We find that the long-run growth rate ceases to depend on the markup when it is disentangled from the returns to specialization, and the same happens with the conditions for saddle-path stability. Numerical simulations show that the steady-state equilibria are more prone to be stable in the model that disentangles parameters. Furthermore, the model is able to generate a rich variety of development scenarios, accounting for a number of stylized facts related to the development process of industrialized countries.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://www.degruyter.com/view/j/snde.2012.16.issue-5/1558-3708.1937/1558-3708.1937.xml?format=INT
Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by De Gruyter in its journal Studies in Nonlinear Dynamics & Econometrics.

Volume (Year): 16 (2012)
Issue (Month): 5 (December)
Pages: 1-27

as
in new window

Handle: RePEc:bpj:sndecm:v:16:y:2012:i:5:p:1-27:n:6
Contact details of provider: Web page: https://www.degruyter.com

Order Information: Web: https://www.degruyter.com/view/j/snde

Keywords:

References listed on IDEAS
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.:

as
in new window


  1. Stokey, Nancy L & Rebelo, Sergio, 1995. "Growth Effects of Flat-Rate Taxes," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 519-550, June.
  2. Benassy, Jean-Pascal, 1998. "Is there always too little research in endogenous growth with expanding product variety?," European Economic Review, Elsevier, vol. 42(1), pages 61-69, January.
  3. Funke, Michael & Strulik, Holger, 2000. "On endogenous growth with physical capital, human capital and product variety," European Economic Review, Elsevier, vol. 44(3), pages 491-515, March.
  4. Benassy, Jean-Pascal, 1996. "Taste for variety and optimum production patterns in monopolistic competition," Economics Letters, Elsevier, vol. 52(1), pages 41-47, July.
  5. Susanto Basu, 1996. "Procyclical Productivity: Increasing Returns or Cyclical Utilization?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 719-751.
  6. Gómez, Manuel A., 2011. "Duplication externalities in an endogenous growth model with physical capital, human capital, and R&D," Economic Modelling, Elsevier, vol. 28(1-2), pages 181-187, January.
  7. Brunner, Martin & Strulik, Holger, 2002. "Solution of perfect foresight saddlepoint problems: a simple method and applications," Journal of Economic Dynamics and Control, Elsevier, vol. 26(5), pages 737-753, May.
  8. Norrbin, Stefan C, 1993. "The Relation between Price and Marginal Cost in U.S. Industry: A Contradiction," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1149-1164, December.
  9. Benhabib Jess & Perli Roberto, 1994. "Uniqueness and Indeterminacy: On the Dynamics of Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 63(1), pages 113-142, June.
  10. Lutz G. Arnold, 2000. "Endogenous technological change: a note on stability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(1), pages 219-226.
  11. Eicher, Theo S. & Turnovsky, Stephen J., 2001. "Transitional dynamics in a two-sector non-scale growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 25(1-2), pages 85-113, January.
  12. Jones, Charles I & Williams, John C, 2000. "Too Much of a Good Thing? The Economics of Investment in R&D," Journal of Economic Growth, Springer, vol. 5(1), pages 65-85, March.
  13. Charles I. Jones, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 495-525.
  14. "Ana Balcão" "Reis" & "Tiago Neves" "Sequeira", 2007. "Human Capital and Overinvestment in R&D," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(3), pages 573-591, 09.
  15. Iacopetta, Maurizio, 2010. "Phases of economic development and the transitional dynamics of an innovation-education growth model," European Economic Review, Elsevier, vol. 54(2), pages 317-330, February.
  16. Arnold, Lutz G., 2000. "Stability of the Market Equilibrium in Romer's Model of Endogenous Technological Change: A Complete Characterization," Journal of Macroeconomics, Elsevier, vol. 22(1), pages 69-84, January.
  17. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
  18. Sequeira, Tiago Neves, 2011. "R&D Spillovers In An Endogenous Growth Model With Physical Capital, Human Capital, And Varieties," Macroeconomic Dynamics, Cambridge University Press, vol. 15(02), pages 223-239, April.
  19. Jess Benhabib & Qinglai Meng & Kazuo Nishimura, 2000. "Indeterminacy under Constant Returns to Scale in Multisector Economies," Econometrica, Econometric Society, vol. 68(6), pages 1541-1548, November.
  20. Iacopetta, Maurizio, 2011. "Formal education and public knowledge," Journal of Economic Dynamics and Control, Elsevier, vol. 35(5), pages 676-693, May.
  21. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
  22. Alvarez-Pelaez, Maria J. & Groth, Christian, 2005. "Too little or too much R&D?," European Economic Review, Elsevier, vol. 49(2), pages 437-456, February.
  23. Benassy, Jean-Pascal, 1996. "Monopolistic competition, increasing returns to specialization and output persistence," Economics Letters, Elsevier, vol. 52(2), pages 187-191, August.
  24. de Groot, Henri L. F. & Nahuis, Richard, 1998. "Taste for diversity and the optimality of economic growth," Economics Letters, Elsevier, vol. 58(3), pages 291-295, March.
  25. Lutz G. Arnold, 2006. "The Dynamics of the Jones R&D Growth Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(1), pages 143-152, January.
  26. Arnold, Lutz G., 2000. "Endogenous growth with physical capital, human capital and product variety: A comment," European Economic Review, Elsevier, vol. 44(8), pages 1599-1605, August.
  27. Manoj Atolia & Edward F. Buffie, 2004. "Reverse Shooting Made Easy: Solving for the Global Nonlinear Saddle Path," Working Papers wp2009_01_01, Department of Economics, Florida State University, revised Jan 2009.
  28. Eicher, Theo S & Turnovsky, Stephen J, 1999. "Convergence in a Two-Sector Nonscale Growth Model," Journal of Economic Growth, Springer, vol. 4(4), pages 413-428, December.
  29. Kim, Jinill, 2004. "What determines aggregate returns to scale?," Journal of Economic Dynamics and Control, Elsevier, vol. 28(8), pages 1577-1594, June.
  30. Javier Coto-Martínez & Carlos Garriga & Fernando Sánchez-Losada, 2007. "Optimal Taxation with Imperfect Competition and Aggregate Returns to Specialization," Journal of the European Economic Association, MIT Press, vol. 5(6), pages 1269-1299, December.
  31. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
Full references (including those not matched with items on IDEAS)

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as
in new window


Cited by:

  1. Tiago Sequeira, 2012. "Facts and distortions in an endogenous growth model with physical capital, human capital and varieties," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(3), pages 171-188, December.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:bpj:sndecm:v:16:y:2012:i:5:p:1-27:n:6. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.