Stability, Global Dynamics and Markov Equilibrium in Models of Economic Growth

Fernando Garcia-Belenguer Campos

No 2006/05, Working Papers in Economic Theory from Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History)

Abstract: This paper studies the local and a global dynamics of two-sector models of endogenous growth with economy-wide external effects and taxes on capital and labor. The local analysis classifies the parameter space depending on the number of stationary solutions and local stability of equilibria. Taxes on labor and subsidies to education may determine the existence of poverty traps and indeterminacy. The global analysis shows that if externalities and taxes are not too big then the equilibrium path is monotone and therefore a continuous Markov equilibrium can be defined.

Keywords: competitive equilibrium; stability; Markov equilibrium; externalities; taxes (search for similar items in EconPapers)
JEL-codes: C62 E62 O41 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2006-03
New Economics Papers: this item is included in nep-geo and nep-mac
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