On the stability of the steady-state of a general model of endogenous growth with two $CES$ production functions
TLDR
This paper investigates the steady-state stability of a Bond-type endogenous growth model with two CES production functions, finding no saddle-path stability.
Key contributions
- Analyzes a general Bond-type endogenous growth model.
- Models both economic sectors using two distinct CES production functions.
- Demonstrates that saddle-path stability cannot be claimed for this specific model.
Why it matters
This research is crucial for understanding the dynamic behavior of endogenous growth models, particularly those employing CES production functions. It highlights limitations in assuming saddle-path stability, which can impact economic policy recommendations. The findings suggest a need for re-evaluation of stability conditions in similar models.
Original Abstract
The main aim of this paper is to study the steady-state properties of a general Bond-type endogenous growth model, considering that both sectors are modeled by two distinct $CES$ production functions. We prove here that in this case, we cannot claim the saddle-path stability.
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