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R&D Spillovers In An Endogenous Growth Model With Physical Capital, Human Capital, And Varieties

  • Sequeira, Tiago Neves

There is a family of models with physical and human capital and R&D for which convergence properties have been discussed [Lutz G. Arnold, European Economic Review 44, 1599–1605 (2000); Manuel Gómez, Studies in Nonlinear Dynamics and Econometrics 9(1), Article 5 (2005)]. However, spillovers in R&D have been ignored in this context. We introduce spillovers in this model and derive the steady-state and stability properties. This new feature implies that the model is characterized by a system of four differential equations. A unique balanced growth path, along with a two-dimensional stable manifold, is obtained under simple and reasonable conditions. Transition is oscillatory toward the steady state for plausible values of parameters. We discovered that these features are due to the presence of the R&D spillovers externality in the decentralized equilibrium.

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Article provided by Cambridge University Press in its journal Macroeconomic Dynamics.

Volume (Year): 15 (2011)
Issue (Month): 02 (April)
Pages: 223-239

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Handle: RePEc:cup:macdyn:v:15:y:2011:i:02:p:223-239_99
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  1. 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.
  2. 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.
  3. Jordi Galí, 1993. "Monopolistic competition, endogenous markups and growth," Economics Working Papers 44, Department of Economics and Business, Universitat Pompeu Fabra.
  4. Lutz G. Arnold, 2000. "Endogenous technological change: a note on stability," Economic Theory, Springer, vol. 16(1), pages 219-226.
  5. 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.
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  8. 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.
  9. 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.
  10. 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 1149-64, December.
  11. Ladron-de-Guevara, Antonio & Ortigueira, Salvador & Santos, Manuel S., 1997. "Equilibrium dynamics in two-sector models of endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 115-143, January.
  12. Fiaschi, Davide & Lavezzi, Andrea Mario, 2003. " Distribution Dynamics and Nonlinear Growth," Journal of Economic Growth, Springer, vol. 8(4), pages 379-401, December.
  13. Arnold, Lutz G., 1998. "Growth, Welfare, and Trade in an Integrated Model of Human-Capital Accumulation and Research," Journal of Macroeconomics, Elsevier, vol. 20(1), pages 81-105, January.
  14. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  15. Arnold, Lutz G., 2005. "The Jones R&D Growth Model: Comment on Stability," University of Regensburg Working Papers in Business, Economics and Management Information Systems 405, University of Regensburg, Department of Economics.
  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.
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