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TRANSITIONAL DYNAMICS AND THRESHOLDS IN ROMER'S ENDOGENOUS TECHNOLOGICAL CHANGE MODEL

Published online by Cambridge University Press:  29 June 2002

Pedro Garcia-Castrillo  and
Marcos Sanso
Pedro Garcia-Castrillo
Affiliation:
University of Zaragoza
Marcos Sanso
Affiliation:
University of Zaragoza
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Abstract

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We obtain the transitional dynamics of the decentralized economy described by P.M. Romer and characterize the dynamic behavior of the most relevant variables. We determine the existence of a stable one-dimensional manifold containing a steady state with innovation, unique in ratios, and also find a threshold in the accumulation of physical capital below which the economy is not innovating. Finally, using simulations, we assess the significance of this threshold and analyze the influence that technological and utility parameters have on it.

Keywords

Endogenous GrowthInnovation ThresholdTransitional Dynamics
Type
Other
Information
Macroeconomic Dynamics , Volume 6 , Issue 3 , June 2002 , pp. 442 - 456
Copyright
© 2002 Cambridge University Press