On the Transition Dynamics in Endogenous Recombinant Growth Models

This paper is a first attempt at studying the transition dynamics of the Tsur and Zemel (2007) continuous time endogenous growth framework in which knowledge evolves according to the Weitzman (1998) recombinant process. For a specific choice of the probability function characterizing the recombinant process, we find a suitable transformation for the state and control variables diverging to asymptotic constant growth, so that an equivalent ‘detrended’ system converging to a steady state in the long run can be tackled. Since the dynamical system obtained so far turns out to be analytically intractable, we rely on numerical simulation in order to fully describe the transition dynamics for a set of values of the parameters.