TY - JOUR
T1 - Transition Dynamics in Endogenous Recombinant Growth Models by Means of Projection Methods
AU - Privileggi, Fabio
PY - 2011/10
Y1 - 2011/10
N2 - This study provides a step further in the computation of the transition path of a continuous time endogenous growth model discussed by Privileggi (Nonlinear dynamics in economics, finance and social sciences: essays in honour of John Barkley Rosser Jr., Springer, Berlin, Heidelberg, pp. 251-278, 2010)-based on the setting first introduced by Tsur and Zemel (J Econ Dyn Control 31:3459-3477, 2007)-in which knowledge evolves according to the Weitzman (Q J Econ 113:331-360, 1998) recombinant process. A projection method, based on the least squares of the residual function corresponding to the ODE defining the optimal policy of the 'detrended' model, allows for the numeric approximation of such policy for a positive Lebesgue measure range of values of the efficiency parameter characterizing the probability function of the recombinant process. Although the projection method's performance rapidly degenerates as one departs from a benchmark value for the efficiency parameter, we are able to numerically compute time-path trajectories which are sufficiently regular to allow for sensitivity analysis under changes in parameters' values.
AB - This study provides a step further in the computation of the transition path of a continuous time endogenous growth model discussed by Privileggi (Nonlinear dynamics in economics, finance and social sciences: essays in honour of John Barkley Rosser Jr., Springer, Berlin, Heidelberg, pp. 251-278, 2010)-based on the setting first introduced by Tsur and Zemel (J Econ Dyn Control 31:3459-3477, 2007)-in which knowledge evolves according to the Weitzman (Q J Econ 113:331-360, 1998) recombinant process. A projection method, based on the least squares of the residual function corresponding to the ODE defining the optimal policy of the 'detrended' model, allows for the numeric approximation of such policy for a positive Lebesgue measure range of values of the efficiency parameter characterizing the probability function of the recombinant process. Although the projection method's performance rapidly degenerates as one departs from a benchmark value for the efficiency parameter, we are able to numerically compute time-path trajectories which are sufficiently regular to allow for sensitivity analysis under changes in parameters' values.
KW - Endogenous recombinant growth
KW - Knowledge production
KW - Least squares
KW - Projection methods
KW - Transition dynamics
UR - http://www.scopus.com/inward/record.url?scp=80052925073&partnerID=8YFLogxK
U2 - 10.1007/s10614-011-9278-7
DO - 10.1007/s10614-011-9278-7
M3 - Article
SN - 0927-7099
VL - 38
SP - 367
EP - 387
JO - Computational Economics
JF - Computational Economics
IS - 3
ER -