Transitional dynamics of an endogenous growth model with an erosion effect

Tiago Sequeira

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: The convergence features of an Endogenous Growth model with Physical capital, Human Capital and R&D have been studied. We add an erosion effect (supported by empirical evidence) to this model, and fully characterize its convergence properties. The dynamics is described by a fourth-order system of differential equations. We show that the model converges along a one-dimensional stable manifold and that its equilibrium is saddle-path stable. We also argue that one of the implications of considering this erosion effect is the increase in the adherence of the model to data.

Keywords: Endogenous growth models; convergence; erosion effect; model fitness (search for similar items in EconPapers)
JEL-codes: O11 O15 O31 O33 O41 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2007
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: TRANSITIONAL DYNAMICS OF AN ENDOGENOUS GROWTH MODEL WITH AN EROSION EFFECT* (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp508

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