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

  • Pedro Garcia-Castrillo (a1) and Marcos Sanso (a1)
Abstract

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.

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Corresponding author
Address correspondence to: Pedro Garcia-Castrillo, Departamento de Análisis Económico, Universidad de Zaragoza, Gran Vía, 2, 50005 Zaragoza, Spain; e-mail: pgarcia@posta.unizar.es.
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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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