Equilibrium dynamics in two-sector models of endogenous growth

Antonio Ladrón-De-Guevara, Salvador Ortigueira, Manuel S. Santos

Research output: Contribution to journalArticle

68 Scopus citations

Abstract

This paper considers two extensions of the Uzawa-Lucas framework. In our first extension, physical capital is included as an input of the educational sector. In our second extension, leisure considerations are assumed to play a positive role in agents' welfare. The case with physical capital in the production of education features (under standard conditions) a unique steady state, and thus the dynamics are qualitatively similar to those of the original Uzawa-Lucas framework. In our second model with leisure there could be a multiplicity of steady states with different rates of growth. What determines here the chosen rate of growth is the initial relative amount of physical and human capital. Our results therefore illustrate that in a world without externalities there could coexist different long-term growth rates.

Original languageEnglish (US)
Pages (from-to)115-143
Number of pages29
JournalJournal of Economic Dynamics and Control
Volume21
Issue number1
DOIs
StatePublished - Jan 1997

Keywords

  • Balanced path
  • Endogenous growth
  • Stability

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics

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