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Transitional Dynamics of an Endogenous Growth Model with an Erosion Effect

Tiago Sequeira ()

FEUNL Working Paper Series from Universidade Nova de Lisboa, Faculdade de Economia

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.

New Economics Papers: this item is included in nep-dge
Date: 2007
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Journal Article: TRANSITIONAL DYNAMICS OF AN ENDOGENOUS GROWTH MODEL WITH AN EROSION EFFECT* (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp508

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