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Stability under Learning: the Endogenous Growth Problem

Author

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  • Orlando Gomes

    (Instituto Politécnico de Lisboa - Escola Superior de Comunicação Social and UNIDE-ERC)

Abstract

A local dynamic analysis, in the neighborhood of the steady-state, is developed for one and two-sector endogenous growth models. The problem differs from the conventionally assumed growth setups because one considers that expectations concerning the next period value of the control variable (consumption) are formed through adaptive learning. In such scenario, the found stability conditions reveal that convergence to the unique steady-state point is feasible if a minimum requirement regarding the quality of learning in the long run equilibrium is fulfilled. Therefore, stability of growth under learning is dependentent on the efficiency with which expectations are generated.

Suggested Citation

  • Orlando Gomes, 2008. "Stability under Learning: the Endogenous Growth Problem," Working Papers Series 1 ercwp1708, ISCTE-IUL, Business Research Unit (BRU-IUL).
    • Handle: RePEc:isc:iscwp1:ercwp1708
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    File URL: http://bru-unide.iscte.pt/RePEc/pdfs/ERCwp1708.pdf
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    Cited by:

    1. Orlando Gomes, 2009. "Stability under learning: the neo-classical growth problem," Economics Bulletin, AccessEcon, vol. 29(4), pages 3186-3193.
    2. Romero-Ávila, Diego, 2011. "Information disclosure, banking development and knowledge-driven growth," Economic Modelling, Elsevier, vol. 28(3), pages 980-990, May.

    More about this item

    Keywords

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    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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