Abstract
We investigate the dependence of the dynamic behavior of an endogenous growth model on the degree of returns to scale. We focus on a simple (but representative) growth model with publicly funded inventive activity. We show that constant returns to reproducible factors (the leading case in the endogenous growth literature) is a bifurcation point, and that it has the characteristics of a transcritical bifurcation. The bifurcation involves the boundary of the state space, making it difficult to formally verify this classification. For a special case, we provide a transformation that allows formal classification by existing methods. We discuss the new methods that would be needed for formal verification of transcriticality in a broader class of models. Journal of Economic Literature Classification Numbers: O41, O30.
Original language | English |
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Pages (from-to) | 70-96 |
Number of pages | 27 |
Journal | Journal of Economic Theory |
Volume | 96 |
Issue number | 1-2 |
DOIs | |
State | Published - Jan 2001 |
Keywords
- Returns to scale; transcritical bifurcation; boundary bifurcation; endogenous growth; inventive activity