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Combining Semi-Endogenous and Fully Endogenous Growth: a Generalization.

Cozzi, Guido (2017): Combining Semi-Endogenous and Fully Endogenous Growth: a Generalization.

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Abstract

This paper shows that combining the semi-endogenous and the fully endogenous growth mechanisms with a general CES aggregator, either growth process can prevail in the balanced growth path depending on their degree of complementarity/substitutability. Policy-induced long-run economic switches to the fully endogenous steady state as the R&D employment ratio surpasses a positive threshold are possible if the two growth engines are gross substitutes.

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