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Multiplicity and stagnation under the Romer model with increasing returns of R&D

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  • Kuwahara, Shiro
Abstract
This study develops a simple growth model to explain stagnation and non-simple growth patterns by using increasing returns of R&D efficiency. The study adopts a type of the lab-equipment model, namely, the Romer model, where goods are used as R&D input. Here, we assume capital, or durable goods, as the R&D input factor, and R&D efficiency is assumed to be variable. This arrangement yields three steady states, namely: no-growth, low-growth, and high-growth steady states. These trajectories are jumpable. Accordingly, global indeterminacy is obtained. By uniting the numerical analysis, we obtain that all steady states are saddle stable. However, when the increasing R&D efficiency is small, the path converging to a high-growth-rate steady state shows local indeterminacy.

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  • Kuwahara, Shiro, 2019. "Multiplicity and stagnation under the Romer model with increasing returns of R&D," Economic Modelling, Elsevier, vol. 79(C), pages 86-97.
    • Handle: RePEc:eee:ecmode:v:79:y:2019:i:c:p:86-97
    DOI: 10.1016/j.econmod.2018.10.003
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    4. Arkadiusz Kijek & Tomasz Kijek, 2020. "Nonlinear Effects of Human Capital and R&D on TFP: Evidence from European Regions," Sustainability, MDPI, vol. 12(5), pages 1-14, February.

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    More about this item

    Keywords

    Increasing returns; Multiple steady states; R&D-based growth; Poverty traps; Indeterminacy;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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