PRIVILEGGI Fabio (2011), "Transition Dynamics in Endogenous Recombinant Growth Models by means of Projection Methods", Computational Economics, 38 (3), 367 - 387.
Codici J.E.L: C61, C63, O31, O41
Parole chiave: Knowledge Production, Endogenous Recombinant Growth, Transition Dynamics, Projection Methods, Least Squares
This paper provides a step further in the computation of the transition path of a continuous time endogenous growth model discussed by Privileggi (2010) -- based on the setting first introduced by Tsur and Zemel (2007) -- in which knowledge evolves according to the Weitzman (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.
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