ENDOGENOUS RECOMBINANT GROWTH

We extend Weitzman's (1998) recombinant growth framework to include endogenous R&D decisions. The analysis is carried out in the (knowledge-capital) state space by means of two characteristic curves: one is identified as a turnpike along which growing economies evolve; the other attracts stagnating economies. Sustained growth depends on a condition relating the slopes of the characteristic curves as well as on a minimal endowment requirement. A growing economy reaches the turnpike at a most rapid R&D rate and evolves along it thereafter. In the long run, the rate of growth and the income shares devoted to R&D, saving and consumption approach constant values that depend on the asymptotic characteristic slopes.


Issue Date:
2006
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/7135
Total Pages:
32
JEL Codes:
C61; O31; O41
Series Statement:
Discussion Paper
No. 2.06




 Record created 2017-04-01, last modified 2018-01-22

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