Growth and multiple equilibria: A unique local dynamics
The paper investigates the local dynamics of a simple growth model with a public health factor. A notable feature of the model is that it employs a non-separable utility function between consumption and the level of public health infrastructure (publicly provided health environment). In addition to the effects on utility, an increase in the public health level contributes to labor productivity growth. From a three-dimensional dynamic system that includes physical capital, public health infrastructure and consumption, our model is found to have multiple equilibria (dual steady states) if the deep parameters of the utility function satisfy certain conditions. Then, numerical computations demonstrate that each equilibrium exhibits local saddle-path stability. This result deserves careful attention, as it indicates that the economy experiences a relatively undiversified growth pattern when converging on high- and low-growth equilibria. Our striking result has important implications in the study of growth and development.
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.
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.
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.:
- Fernandez, Esther & Novales, Alfonso & Ruiz, Jesus, 2004. "Indeterminacy under non-separability of public consumption and leisure in the utility function," Economic Modelling, Elsevier, vol. 21(3), pages 409-428, May.
- Xavier Raurich, 2003. "Government Spending, Local Indeterminacy and Tax Structure," Economica, London School of Economics and Political Science, vol. 70(280), pages 639-653, November.
- Xie Danyang, 1994.
"Divergence in Economic Performance: Transitional Dynamics with Multiple Equilibria,"
Journal of Economic Theory,
Elsevier, vol. 63(1), pages 97-112, June.
- Danyang Xie, 2002. "Divergence in Economic Performance: Transitional Dynamics with Multiple Equilibria," GE, Growth, Math methods 0210002, EconWPA.
- Bennett, R.L. & Farmer, R.E.A., 1999.
"Indeterminacy with Non-Separable Utility,"
Economics Working Papers
eco99/34, European University Institute.
- Alfred Greiner, 2003. "On the dynamics of an endogenous growth model with learning by doing," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(1), pages 205-214, 01.
- Rafaela Mª Pérez Sánchez & Jesús Ruiz Andújar, 2004.
"Global and local indeterminacy and optimal environmental public policies in an economy with public abatement activities,"
Documentos de Trabajo del ICAE
0408, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
- Perez, Rafaela & Ruiz, Jesus, 2007. "Global and local indeterminacy and optimal environmental public policies in an economy with public abatement activities," Economic Modelling, Elsevier, vol. 24(3), pages 431-452, May.
- Rafaela Pérez Sánchez & Jesús Ruiz, 2004. "Global and local indeterminacy and optimal environmental public policies in an economy with public abatement activities," Economic Working Papers at Centro de Estudios Andaluces E2004/79, Centro de Estudios Andaluces.
- Barro, Robert J., 1990.
"Government Spending in a Simple Model of Endogeneous Growth,"
3451296, Harvard University Department of Economics.
- Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October.
- Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
- Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
- Alonso-Carrera, Jaime & Freire-Seren, Maria Jesus, 2004.
"Multiple equilibria, fiscal policy, and human capital accumulation,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 28(4), pages 841-856, January.
- Jaime Alonso-Carrera & María Jesús Freire-Serén, 2002. "Multiple equilibria, fiscal policy, and human capital accumulation," Working Papers 0204, Universidade de Vigo, Departamento de Economía Aplicada.
- Benhabib, J. & Meng, Q. & Nishimura, K., 1999.
"Indeterminacy Under Constant Returns to Scale in Multisector Economies,"
99-17, C.V. Starr Center for Applied Economics, New York University.
- 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.
- Park, Hyun & Philippopoulos, Apostolis, 2004. "Indeterminacy and fiscal policies in a growing economy," Journal of Economic Dynamics and Control, Elsevier, vol. 28(4), pages 645-660, January.
- Cazzavillan, Guido, 1996. "Public Spending, Endogenous Growth, and Endogenous Fluctuations," Journal of Economic Theory, Elsevier, vol. 71(2), pages 394-415, November.
- Agénor, Pierre-Richard, 2008. "Health and infrastructure in a model of endogenous growth," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1407-1422, December.
- Rosa Capolupo, .
"Output Taxation, Human Capital and Growth,"
9711, Business School - Economics, University of Glasgow.
- 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.
When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:29:y:2012:i:5:p:1662-1665. 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: (Zhang, Lei)
If references are entirely missing, you can add them using this form.