Business Intelligence

Factor Intensities And Transitional Dynamics In Three-Sector Endogenous Growth Models

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Executive Summary

The authors characterize transitional dynamics in three-sector endogenous growth models without externalities, by presenting a complete taxonomy based upon the algebraic properties of the matrix of factor intensities. Their analysis allows one to relate the algebraic properties of the coefficient matrix with higher dimensional generalizations of the Stolper-Samuelson and Rybczynski theorems and with transitional dynamics around a balanced growth path. They prove that the local stable manifold is of dimension zero or two. Non-monotonic dynamics tend to be the most prevalent type of transitional adjustment and there are three types of adjustments, in which prices, quantities or both are the main driving force for stability.

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