Multiple steady states, indeterminacy, and cycles in a basic model of endogenous growth
- The goal of this paper is to demonstrate that a standard model of endogenous growth with learning by doing may produce a rich variety of possible outcomes. Starting point of our analysis is the Romer (1986a) approach. In contrast to Romer, however, we assume that one unit of investment shows different effects concerning the building up of physical and human capital, so that these variables cannot be merged into one single variable. With this assumption, it can be shown that multiple steady states, indeterminacy of equilibria and persistent cycles may result in our model.
