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Takeoff vs. stagnation in endogenous recombinant growth models

Listed author(s):
  • Privileggi, Fabio

This paper concludes the study of transition paths in the continuous-time recombinant endogenous growth model by providing numerical methods to estimate the threshold initial value of capital (a Skiba-type point) above which the economy takes off toward sustained growth in the long run, while it is doomed to stagnation otherwise. The model is based on the setting first introduced by Tsur and Zemel and then further specified by Privileggi, in which knowledge evolves according to the Weitzman recombinant process. We pursue a direct approach based on the comparison of welfare estimations along optimal consumption trajectories either diverging to sustained growth or converging to a steady state. To this purpose, we develop and test three algorithms capable of numerically simulating the initial Skiba-value of capital, each corresponding to initial stock of knowledge values belonging to three different ranges, thus covering all possible scenarios.

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File URL: http://www.sciencedirect.com/science/article/pii/S037847541400161X
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Article provided by Elsevier in its journal Mathematics and Computers in Simulation (MATCOM).

Volume (Year): 108 (2015)
Issue (Month): C ()
Pages: 184-214

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Handle: RePEc:eee:matcom:v:108:y:2015:i:c:p:184-214
DOI: 10.1016/j.matcom.2014.05.012
Contact details of provider: Web page: http://www.journals.elsevier.com/mathematics-and-computers-in-simulation/

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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
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  4. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
  5. Dechert, W. Davis & Nishimura, Kazuo, 1983. "A complete characterization of optimal growth paths in an aggregated model with a non-concave production function," Journal of Economic Theory, Elsevier, vol. 31(2), pages 332-354, December.
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  8. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 43-61.
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  10. Haunschmied, Josef L. & Feichtinger, Gustav & Hartl, Richard F. & Kort, Peter M., 2005. "Keeping up with the technology pace: A DNS-curve and a limit cycle in a technology investment decision problem," Journal of Economic Behavior & Organization, Elsevier, vol. 57(4), pages 509-529, August.
  11. Martin L. Weitzman, 1998. "Recombinant Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 331-360.
  12. Miguel-Angel Martín & Agustín Herranz, 2004. "Human capital and economic growth in Spanish regions," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 10(4), pages 257-264, November.
  13. Fabio Privileggi, 2011. "Transition Dynamics in Endogenous Recombinant Growth Models by Means of Projection Methods," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 367-387, October.
  14. Halkin, Hubert, 1974. "Necessary Conditions for Optimal Control Problems with Infinite Horizons," Econometrica, Econometric Society, vol. 42(2), pages 267-272, March.
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  16. repec:kap:iaecre:v:10:y:2004:i:4:p:257-264 is not listed on IDEAS
  17. Haunschmied, Josef L. & Kort, Peter M. & Hartl, Richard F. & Feichtinger, Gustav, 2003. "A DNS-curve in a two-state capital accumulation model: a numerical analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 27(4), pages 701-716, February.
  18. Charles I. Jones, 2005. "The Shape of Production Functions and the Direction of Technical Change," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 517-549.
  19. Caulkins, Jonathan P. & Feichtinger, Gustav & Grass, Dieter & Hartl, Richard F. & Kort, Peter M., 2011. "Two state capital accumulation with heterogenous products: Disruptive vs. non-disruptive goods," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 462-478, April.
  20. Tsur, Yacov & Zemel, Amos, 2007. "Towards endogenous recombinant growth," Journal of Economic Dynamics and Control, Elsevier, vol. 31(11), pages 3459-3477, November.
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