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Flexible Transitional Dynamics in a Non-Scale Fully Endogenous Growth Model

Author

Listed:
  • Pedro Mazeda Gil

    () (University of Porto, Faculty of Economics, and cef.up)

  • André Almeida,

    () (University of Porto, Faculty of Economics)

  • Sofia B.S.D. Castro,

    () (University of Porto, Faculty of Economics, and CMUP)

Abstract

This paper develops a non-scale growth model of physical capital accumulation and two types of lab-equipment R&D, where both the intensive and extensive margins of growth are fully endogenous. We study analytically the long-run equilibrium stability and transitional dynamics properties of the model, and establish meaningful sufficient conditions for saddle-path stability. We relate the different combinations of initial conditions of the dynamical system with the observation of monotonic versus non-monotonic transitional dynamics. Our model is able to predict monotonic, hump-shaped and inverted hump-shaped trajectories, therefore encompassing the evidence reported by the empirical literature for distinct subsets of countries.

Suggested Citation

  • Pedro Mazeda Gil & André Almeida, & Sofia B.S.D. Castro,, 2015. "Flexible Transitional Dynamics in a Non-Scale Fully Endogenous Growth Model," CEF.UP Working Papers 1503, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:cetedp:1503
    as

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    File URL: http://cefup.fep.up.pt/uploads/WorkingPapers/wp1503.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Keywords: endogenous growth; non-monotonic transitional dynamics; R&D; lab equipment; physical capital;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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