Education and growth: A simple model with complicated dynamics

Theodore Palivos and Dimitrios Varvarigos

International Journal of Economic Theory, 2010, vol. 6, issue 4, 367-384

Abstract: We construct a simple model of education and growth in which children spend a fraction of their time and parents spend a fraction of their income on education. Both a strategic complementarity and an intergenerational externality are present. The interactions between each pair of consecutive generations lead to rich dynamics. We show that multiple growth equilibria arise, some of them periodic and some aperiodic. We also find a negative correlation between volatility and growth, without a one‐way causal relationship between the two being, necessarily, present. Rather, this negative correlation is driven by the structural characteristics of the economy.

Date: 2010
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https://doi.org/10.1111/j.1742-7363.2010.00141.x

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Working Paper: Education and Growth: A Simple Model with Complicated Dynamics (2009)
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