A Growth Model with Qualities, Varieties, and Human Capital: Stability and Transitional Dynamics

• Autor(a) principal: Gomes, Orlando
• Data de Publicação: 2014
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.21/6900
• 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.