A note on global dynamics and imbalance effects in the Lucas-Uzawa model

Raouf Boucekkine (), Blanca Martinez () and José Ruiz-Tamarit

Working Papers from Business School - Economics, University of Glasgow

Abstract: In the traditional literature on the Lucas-Uzawa model, it is proved that in the neighborhood of the long-run balanced growth path, human capital stock grows at a rate greater than its long-run counterpart when the ratio physical to human capi- tal is above its long run value if and only if the capital share in the production of physical good is lower than the inverse of the elasticity of intertemporal substitution in consumption. We first prove that the claim is true outside the neighborhood of balanced growth paths. More importantly, we identify a crucial asymmetry: what- ever the position of the capital share with respect to the inverse of the elasticity of intertemporal substitution, physical capital stock always grows at a rate lower than its long-run counterpart when the ratio physical to human capital is above its long run value.

Keywords: Lucas-Uzawa; hypergeometric functions; imbalance e®ects; global dynamics. (search for similar items in EconPapers)
JEL-codes: C60 E20 O40 (search for similar items in EconPapers)
Date: 2007-09
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Note on global dynamics and imbalance effects in the Lucas-Uzawa model (2009)
Journal Article: Note on global dynamics and imbalance effects in the Lucas–Uzawa model (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2007_26

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