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Endogenous Recombinant Growth

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  • Tsur, Yacov
  • Zemel, Amos

Abstract

We extend Weitzman's (1998) recombinant growth framework to include endogenous R&D decisions. The analysis is carried out in the (knowledge-capital) state space by means of two characteristic curves: one is identified as a turnpike along which growing economies evolve; the other attracts stagnating economies. Sustained growth depends on a condition relating the slopes of the characteristic curves as well as on a minimal endowment requirement. A growing economy reaches the turnpike at a most rapid R&D rate and evolves along it thereafter. In the long run, the rate of growth and the income shares devoted to R&D, saving and consumption approach constant values that depend on the asymptotic characteristic slopes.

Suggested Citation

  • Tsur, Yacov & Zemel, Amos, 2006. "Endogenous Recombinant Growth," Discussion Papers 7135, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    • Handle: RePEc:ags:huaedp:7135
    DOI: 10.22004/ag.econ.7135
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    References listed on IDEAS

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    1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    2. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    3. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
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    Cited by:

    1. van den Bergh, Jeroen C.J.M., 2008. "Optimal diversity: Increasing returns versus recombinant innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 68(3-4), pages 565-580, December.

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