Summary.
This paper demonstrates that the steady-state solution of the optimal-growth problem in Romer's (1990) model of endogenous technological change is globally saddle-point stable. Surprisingly, the proof of this result is trivial. Interest in the optimal growth path is justified by the fact that there is a (unique) combination of production and R&D subsidies by means of which the optimal growth path is attained as a market equilibrium.
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Received: October 6, 1998; revised version: April 19, 1999
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Arnold, L. Endogenous technological change: a note on stability. Econ Theory 16, 219–226 (2000). https://doi.org/10.1007/s001990050335
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DOI: https://doi.org/10.1007/s001990050335