A dynamical countries-interaction model based on technology for the study of European growth and stability

Bernardo Maggi and Daniel Muro ()
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Daniel Muro: Universita' di Roma III

No 2014/1, DSS Empirical Economics and Econometrics Working Papers Series from Centre for Empirical Economics and Econometrics, Department of Statistics, "Sapienza" University of Rome

Abstract: With this study we intend to define a methodology capable to deal with the task of evaluating and planning the interdependent dynamics of growth for some European countries together with their foreign partners. To that aim we employ a nonlinear differential equations system representing a disequilibrium model based on a Schumpeterian evolutionary context with endogenous technology. We use such a model in order to disentangle the interrelationships occurring among countries for the critical variables considered. That is, we succeed in evaluating the contribution to growth of a country with respect to another one in terms of the variables involved. We address and corroborate the validity of our conjectures on the importance of the business services in the innovation and production processes by presenting also a minimal model. Further, we provide an evaluation of the convolution integral of our differential system to determine the necessary initial conditions of the critical variables for policy purposes. We then perform a sensitivity analysis to assess per each country the effectiveness of some possible efforts in order to gain stability.

Keywords: Continuous Time Panel Econometrics; Distance; Programming; Growth; Stability; Sensitivity; Technology; Business Services. (search for similar items in EconPapers)
JEL-codes: C33 C61 C62 O11 O33 O34 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2014-01
New Economics Papers: this item is included in nep-cse, nep-gro and nep-knm
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Persistent link: https://EconPapers.repec.org/RePEc:sas:wpaper:20141

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