A growth model with qualities, varieties, and human capital: stability and transitional dynamics

• Autor(a) principal: Sequeira, T. N.
• Data de Publicação: 2014
• Outros Autores: Ferreira-Lopes, A., Gomes, O.
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: https://ciencia.iscte-iul.pt/public/pub/id/12798; http://hdl.handle.net/10071/8311
• topic: Vertical and horizontal R&D; Human capital; Endogenous growth models; Steady-state stability; Transitional dynamics

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.