Abstract
This study explores the stability of the stationary state for a dynamic growth model with wealth and human capital accumulation. Knowledge is created through research and learning‐by‐doing, while the time allocation between labour and leisure is endogenised. We analyse the model in both its deterministic and stochastic versions. First, we describe the deterministic model and analyse the stationary state. Second, using the stationary state, we define the stochastic perturbation and study the squared mean values of the system states for the linearised model. Third, we prove that for certain parameters, the stationary state in the deterministic model is asymptotically stable. Similarly, we also prove that the squared mean values of the variables in the linearised stochastic model are asymptotically stable. Finally, we perform the comparative dynamic analysis for the propensities to save and to enjoy leisure, the tax rates used to finance research and the knowledge utilisation efficiency.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.