Endogenous Innovation in a Growth Model à la Solow

Ngoc-Sang Pham, Thi Kim Cuong Pham, Trong Tin Nguyen and Cuong Le Van

No 2025-46, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: We develop a dynamic endogenous-growth model with an R&D sector in which the elasticity of innovation with respect to existing knowledge can be negative. We prove the existence and uniqueness of a balanced growth path (BGP) and derive closed-form growth factors, showing that productivity and output growth are semi-endogenous and population-driven. We also establish the global stability under general production function. Under testable parameter restrictions, the economy converges to the BGP. When the knowledge elasticity is sufficiently low, a Jacobian-based condition implies instability, and an N-period innovation cycle can emerge. Comparative statics are conducted to show the role of several factors, including research efficiency, elasticity of inputs and population growth. Calibrated simulations map out transitions and mark the points at which stability is lost. They make clear when innovation frictions endanger balanced growth and provide practical guidance for R&D and demographic policy.

Keywords: endogenous growth; population-driven growth; balanced growth path; stability; instability; innovation; monotone dynamical system. (search for similar items in EconPapers)
JEL-codes: C62 O31 O41 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2025
New Economics Papers: this item is included in nep-cse, nep-inv and nep-sbm
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