Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92614
Authors: 
Hori, Katsuhiko
Yamada, Katsunori
Year of Publication: 
2009
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 731
Abstract: 
This paper combines three prototype endogenous growth models, the models with human capital accumulation introduced by Uzawa [1965] and Lucas [1988], variety expansion by Romer [1990], and quality improvements by Aghion and Howitt [1992], in order to investigate how these three engines of growth interact. We show that a subsidy to human capital accumulation has a positive impact on R&D effort, as well as on human capital accumulation. On the other hand, a subsidy to R&D sectors does not affect human capital accumulation in our model. Moreover, we show that equilibrium dynamics is locally saddle-path stable around the steady growth path. It suggests that Schumpeterian growth models `a la Howitt [1999] should share the locally saddle-path stable property. Finally, since in our model the percapita output growth rate is endogenously determined by both technology improvements and human capital accumulation, it bridges the gap between the literature on Schumpeterian growth models and that on growth empirics.
Subjects: 
quality improvements
variety expansion
human capital accumulation
subsidies
JEL: 
O15
O32
O41
Document Type: 
Working Paper

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