R&D Spillovers in an Endogenous Growth Model with Physical Capital, Human Capital and Varieties

Abstract

There is a family of models with Physical, Human capital and R&D for which convergence properties have been discussed (Arnold, 2000a; Gomez, 2005). However, spillovers in R&D have been ignored in this context. We introduce spillovers in this model and derive its steady-state and stability properties. This new feature implies that the model is characterized by a system of four differential equations. A unique Balanced Growth Path along with a two dimensional stable manifold are obtained under simple and reasonable conditions. Transition is oscillatory toward the steady-state for plausible values of parameters.