Equilibrium Dynamics in Two-Sector Models of Endogenous Growth

Antonio Ladron de Guevara, Salvador Ortigueira and Manuel Santos
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Antonio Ladron de Guevara: Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM)

No 9403, Working Papers from Centro de Investigacion Economica, ITAM

Abstract: Recent research has focused on the dynamics of the Lucas-Uzawa model of endogenous growth (e.g., Caballé-Santos (1993), Chamley (1993) and Faig (1993)). This model allows for permanent growth of both consumption and investment, propelled by a human capital technology. In contrast to the standard neoclassical growth model, the level of technological progress or education is determined by the decision process of economic agents, and thus the dynamics of growth is not driven by an exogenous force external to the economy. The model then yields certain specific predictions on the determinants of long-term growth, and on the interaction of physical and human capital in the transition off steady states. Also, this framework provides a useful setting to assess the effects of economic policies on the process of physical and human capital accumulation.

Pages: 41 pages
Date: 1994-05
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Related works:
Journal Article: Equilibrium dynamics in two-sector models of endogenous growth (1997)
Working Paper: Equilibrium dynamics in two-sector models of endogenous growth (1994)
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