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Transitional Dynamics of an Endogenous Growth Model with an Erosion Effect

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  • Sequeira, Tiago Neves

Abstract

The convergence features of an Endogenous Growth model with Physical capital, Human Capital and R&D have been studied. We add an erosion effect (supported by empirical evidence) to this model, and fully characterize its convergence properties. The dynamics is described by a fourth-order system of differential equations. We show that the model converges along a one-dimensional stable manifold and that its equilibrium is saddle-path stable. We also argue that one of the implications of considering this “erosion effect” is the increase in the adherence of the model to data.

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  • Sequeira, Tiago Neves, 2007. "Transitional Dynamics of an Endogenous Growth Model with an Erosion Effect," FEUNL Working Paper Series wp508, Universidade Nova de Lisboa, Faculdade de Economia.
  • Handle: RePEc:unl:unlfep:wp508
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    Cited by:

    1. Manuel A. Gómez, 2012. "Equilibrium Dynamics Of An Endogenous Growth Model With An Erosion Effect And Duplication In R&D," Manchester School, University of Manchester, vol. 80(6), pages 700-717, December.
    2. Chen, Xi & Funke, Michael, 2013. "The dynamics of catch-up and skill and technology upgrading in China," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 465-480.
    3. Donald A R George, 2011. "Stability of Growth Models with Generalised Lag Structures," ESE Discussion Papers 205, Edinburgh School of Economics, University of Edinburgh.
    4. Sequeira Tiago Neves & Ferreira-Lopes Alexandra & Gomes Orlando, 2014. "A growth model with qualities, varieties, and human capital: stability and transitional dynamics," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 18(5), pages 1-13, December.
    5. George, Donald A R, 2011. "Stability of Growth Models with Generalised Lag Structures," SIRE Discussion Papers 2011-63, Scottish Institute for Research in Economics (SIRE).

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