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Studies in Nonlinear Dynamics & Econometrics

Ed. by Mizrach, Bruce

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Volume 18, Issue 5

Issues

A growth model with qualities, varieties, and human capital: stability and transitional dynamics

Tiago Neves Sequeira
  • Corresponding author
  • Faculdade de Ciências Sociais e Humanas, Universidade da Beira Interior, CEFAGE-UBI Research Center, Estrada do Sineiro, 6200-209 Covilhã, Portugal
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Alexandra Ferreira-Lopes
  • Instituto Universitário de Lisboa, ISCTE-IUL, ISCTE Business School Economics Department, BRU-IUL (Business Research Unit), Lisboa, Portugal; and CEFAGE-UBI
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Orlando Gomes
Published Online: 2013-12-11 | DOI: https://doi.org/10.1515/snde-2013-0018

Abstract

This article analyses the stability properties of the steady-state and the transitional dynamics of an endogenous growth model with human capital, increasing-varieties R&D, and quality-ladders R&D [Strulik, H. 2005. “The Role of Human Capital and Population Growth in R&D-Based Models of Economic Growth.” Review of International Economics 13 (1): 129–145.]. We show that when spillovers within R&D sectors are higher than spillovers across the two R&D sectors, the equilibrium is unstable. However, when spillovers between sectors are higher than within, the equilibrium is a saddle-path. This result emphasizes the need for empirical research that compares quantitatively the importance of these two types of spillovers and highlights the importance of studying intersectoral effects between the two R&D sectors. We describe plausible paths of economic development after changes in crucial parameters and uncover some transitional effects that were impossible to detect in the steady-state analysis. We also show that this model’s transition dynamics can mimic the main features of the process of productivity slowdown that began in the 1970s.

Keywords: endogenous growth models; human capital; steady-state stability; transitional dynamics; vertical and horizontal R&D

JEL classification: O11; O15; O31; O33; O41

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About the article

Corresponding author: Tiago Neves Sequeira, Faculdade de Ciências Sociais e Humanas, Universidade da Beira Interior, CEFAGE-UBI Research Center, Estrada do Sineiro, 6200-209 Covilhã, Portugal, Phone: +351919204088, e-mail:


Published Online: 2013-12-11

Published in Print: 2014-12-01


Citation Information: Studies in Nonlinear Dynamics & Econometrics, Volume 18, Issue 5, Pages 543–555, ISSN (Online) 1558-3708, ISSN (Print) 1081-1826, DOI: https://doi.org/10.1515/snde-2013-0018.

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