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
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.
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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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