Transitional Dynamics of an Endogenous Growth Model with an Erosion Effect

17 Pages Posted: 16 Jun 2008

See all articles by Tiago Neves Sequeira

Tiago Neves Sequeira

University of the Interior of Beira - Faculty of Social Sciences and Humanities; Nova School of Business and Economics

Multiple version iconThere are 2 versions of this paper

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, for most plausible values for the parameters. We also argue that one of the implications of considering this erosion effect is the increase in the adherence of the model to data.

Suggested Citation

Neves Sequeira, Tiago, Transitional Dynamics of an Endogenous Growth Model with an Erosion Effect. Manchester School, Vol. 76, Issue 4, pp. 436-452, July 2008, Available at SSRN: https://ssrn.com/abstract=1144920 or http://dx.doi.org/10.1111/j.1467-9957.2008.01068.x

Tiago Neves Sequeira (Contact Author)

University of the Interior of Beira - Faculty of Social Sciences and Humanities ( email )

6200-209 Covilha
Portugal

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
335
PlumX Metrics