Growth Dynamics and Returns to Scale: Bifurcation Analysis

Gaetano Antinolfi, Todd Keister, Karl Shell

    Research output: Contribution to journalArticlepeer-review

    4 Scopus citations

    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 languageEnglish
    Pages (from-to)70-96
    Number of pages27
    JournalJournal of Economic Theory
    Volume96
    Issue number1-2
    DOIs
    StatePublished - Jan 2001

    Keywords

    • Returns to scale; transcritical bifurcation; boundary bifurcation; endogenous growth; inventive activity

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