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Transitional Dynamics in an R&D-based Growth Model with Natural Resources

Author

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  • Thanh Le

    (University of Queensland [Brisbane])

  • Cuong Le Van

    (VCREME - Van Xuan Center of Research in Economics, Management and Environment, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IPAG Business School)

Abstract

Upon introducing natural resources, both renewable and non-renewable, into an endogenous growth framework with R&D, this paper derives the transitional dynamics of an economy towards its long-run equilibrium. Using the Euler - Lagrange framework, this paper has succesfully figured out the optimal paths of the economy. It then shows the existence and uniqueness of a balanced growth path for each type of resources. The steady state is shown to be of a saddle point stability. Along the balanced growth path, it is found that a finite size resource sector coexists with other continuously growing sectors. The paper then examines long-run responses of the economy to various changes pertaining to innovative production condition, resource sector parameters as well as rate of time preference. It also shows that positive long-run growth will be sustained regardless the type of resources used.

Suggested Citation

  • Thanh Le & Cuong Le Van, 2014. "Transitional Dynamics in an R&D-based Growth Model with Natural Resources," Post-Print halshs-01114589, HAL.
  • Handle: RePEc:hal:journl:halshs-01114589
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01114589
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    References listed on IDEAS

    as
    1. Hippolyte d'Albis & Pascal Gourdel & Cuong Le Van, 2004. "Existence of Solutions in Continuous-time Optimal Growth Models," Post-Print halshs-03330885, HAL.
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    6. Hippolyte d’Albis & Pascal Gourdel & Cuong Le Van, 2008. "Existence of solutions in continuous-time optimal growth models," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(2), pages 321-333, November.
    7. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
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    Cited by:

    1. Le, Thanh & Le Van, Cuong, 2018. "Research and development and sustainable growth over alternative types of natural resources," Economic Modelling, Elsevier, vol. 70(C), pages 215-229.
    2. Burcu Afyonoğlu Fazlıoğlu & Agustín Pérez-Barahona & Çağrı Sağlam, 2019. "Energy and Physical Capital: A Case of Non-classical Dynamics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(4), pages 1003-1022, April.

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    More about this item

    Keywords

    transitional dynamics; natural resources; vertical innovation; R&D-based growth;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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