Multiple steady states and indeterminacy in the Uzawa-Lucas model with educational externalities. (English) Zbl 1414.91277
Summary: This study attempts to endogenize educational efficiency, a critical exogenous parameter in the Uzawa-Lucas model, where human capital accumulation plays an important role in economic growth. Human capital accumulation is a puzzle; in addition to the broadly recognized positive spillover of human capital, educated human capital productivity occasionally shows a decreasing trend in the economic growth process [C. I. Jones, Q. J. Econ. 110, No. 2, 495–525 (1995; Zbl 0831.90028);
L. Pritchett, “Where has all the education gone?”, World Bank Econ. Rev. 15, No. 3, 367–391 (2001; doi:10.1093/wber/15.3.367)]. Incorporating these phenomena as educational externalities into the Uzawa-Lucas model, we analyze the properties of endogenous growth and stagnation. The model yields multiple steady states under intertemporal substitution elasticity larger than 1. The results reveal that a steady state with a higher growth rate demonstrates indeterminacy, and the selection of the steady states depends on expectation formation.
Keywords:
Uzawa-Lucas model; negative growth effects on education; educational externality; local and global indeterminacyCitations:
Zbl 0831.90028References:
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