Endogenous technological change: a note on stability |
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Authors: | Lutz G Arnold |
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Institution: | (1) Department of Economics, University of Dortmund, Vogelpothsweg 87, D-44227 Dortmund, GERMANY (e-mail: lutz.arnold@wiso.uni-dortmund.de), DE |
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Abstract: | Summary. This paper demonstrates that the steady-state solution of the optimal-growth problem in Romer's (1990) model of endogenous
technological change is globally saddle-point stable. Surprisingly, the proof of this result is trivial. Interest in the optimal
growth path is justified by the fact that there is a (unique) combination of production and R&D subsidies by means of which
the optimal growth path is attained as a market equilibrium.
Received: October 6, 1998; revised version: April 19, 1999 |
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Keywords: | and Phrases: R& D Endogenous growth Saddle-point stability Transitional dynamics |
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