A Two-Sector Model of Creative Capital Driven Regional Economic Growth

Amitrajeet Batabyal and Peter Nijkamp

MPRA Paper from University Library of Munich, Germany

Abstract: We study aspects of economic growth in a region that is creative in the sense of Richard Florida. We model creativity by supposing that the region under study has two sectors. The first sector uses physical capital {K(t)} and trained workers {A(t)W(t)} to produce creative capital {R(t)}. The second sector uses physical and creative capital to produce a final consumption good {Q(t)}. In this setting, we accomplish four tasks. First, we derive the equations of motion for physical capital per trained worker (k) and creative capital per trained worker (r). Second, we find combinations of k and r for which k ̇=r ̇=0. Third, we investigate whether the economy of our creative region has a balanced growth path (BGP). Finally, assuming that our region is initially on a BGP, we study the impact of a permanent increase in the savings rate (s) on the trajectory of output per worker.

Keywords: Balanced Growth Path; Consumption Good; Creative Capital; Creative Region; Economic Growth (search for similar items in EconPapers)
JEL-codes: O41 R11 (search for similar items in EconPapers)
Date: 2017-05-25
New Economics Papers: this item is included in nep-cul, nep-geo, nep-gro and nep-knm
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Related works:
Journal Article: A Two-Sector Model of Creative Capital Driven Regional Economic Growth (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:79572

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