Abstract

We analyze the transitional dynamics of an endogenous growth model with physical capital, human capital, and R&D. We provide conditions for the existence of a feasible steady state equilibrium with positive long-run growth. For appropriate parameter values, the transitional dynamics of the model is represented by a two-dimensional stable manifold. This provides much richer dynamics than that of the standard two-sector endogenous growth model which is characterized by a one-dimensional stable manifold. We also show how the adjustment paths can be correctly computed by noting that the continuity of the shadow prices involves the continuity of transitional paths.

Recommended Citation

Manuel A. Gómez (2005) "Transitional Dynamics in an Endogenous Growth Model with Physical Capital, Human Capital and R&D", Studies in Nonlinear Dynamics & Econometrics: Vol. 9: No. 1, Article 5.
http://www.bepress.com/snde/vol9/iss1/art5