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Authors
Advisor(s)
Abstract(s)
This article analyses the stability properties of the steady-state and the transitional dynamics of an endogenous growth model with human capital, increasing-varieties R&D, and quality-ladders R&D [Strulik, 2005, Review of International Economics, 13 (1): 129-145]. We show that when spillovers within R&D sectors are higher than spillovers across the two R&D sectors, the equilibrium is unstable. However, when spillovers between sectors are higher than within, the equilibrium is a saddle-path. This result emphasizes the
need for empirical research that compares quantitatively the importance of these two types of spillovers and highlights the importance of studying intersectoral effects between the two R&D sectors. We describe plausible paths of economic development after changes in crucial parameters and uncover some
transitional effects that were impossible to detect in the steady-state analysis. We also show that this model’s transition dynamics can mimic the main features of the process of productivity slowdown that began in the 1970’s.
Description
Keywords
Vertical and Horizontal R&D, Human Capital, Endogenous Growth Models; Steady-State Stability; Transitional Dynamics.
Citation
Sequeira, T.N.; A. Ferreira-Lopes and O. Gomes (2014). “A Growth Model with Qualities, Varieties, and Human Capital: Stability and Transitional Dynamics.” Studies in Nonlinear Dynamics & Econometrics, vol. 18, issue 5, pp. 543-555.