A note on global dynamics and imbalance effects in the Lucas-Uzawa model

In the traditional literature on the Lucas-Uzawa model, it is proved that in the neighborhood of the long-run balanced growth path, human capital stock grows at a rate greater than its long-run counterpart when the ratio physical to human capi- tal is above its long run value if and only if the capital share in the production of physical good is lower than the inverse of the elasticity of intertemporal substitution in consumption. We first prove that the claim is true outside the neighborhood of balanced growth paths. More importantly, we identify a crucial asymmetry: what- ever the position of the capital share with respect to the inverse of the elasticity of intertemporal substitution, physical capital stock always grows at a rate lower than its long-run counterpart when the ratio physical to human capital is above its long run value.

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Document type	Document de travail (Working Paper)
Access type	Accès libre
Publication date	2007
Language	Anglais
Number of pages	14 pages
Collection	Working Papers Business School - Economics, University of Glasgow - 2007-26
Affiliations	UCL - EUEN/CORE - Center for operations research and econometrics Universidad Complutense de Madrid - Department of economics Universitat de valència - Department of economics UCL - ESPO/ECON - Département des sciences économiques
Keywords	Lucas-Uzawa ; Hypergeometric functions ; Imbalance effects ; Global dynamics
Links	http://www.gla.ac.uk/media/media_43619_en.pdf http://hdl.handle.net/2078.1/95699[Handle]

See also
	[boreal:23287]	Note on global dynamics and imbalance effects in the Lucas–Uzawa model