On the stability of the steady-state of a general model of endogenous growth with two $CES$ production functions

TL;DR

This paper investigates the steady-state stability of a general endogenous growth model with two sectors, each modeled by CES functions, and finds that saddle-path stability cannot be assured.

Contribution

It provides a theoretical analysis showing the lack of saddle-path stability in a two-sector CES-based endogenous growth model.

Findings

Proves that the model does not exhibit saddle-path stability.

Analyzes steady-state properties of a Bond-type endogenous growth model.

Highlights limitations of stability in models with multiple CES functions.

Abstract

The main aim of this paper is to study the steady-state properties of a general Bond-type endogenous growth model, considering that both sectors are modeled by two distinct $CES$ production functions. We prove here that in this case, we cannot claim the saddle-path stability.