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Increasing Returns in a Model With Creative and Physical Capital: Does a Balanced Growth Path Exist?

Author

Listed:
  • Batabyal, Amitrajeet
Abstract
In this note we study aspects of economic growth in a region that produces a final consumption good with creative and physical capital. This consumption good is manufactured with a production function that exhibits increasing returns to scale. Our analysis leads to three results. First, we compute the growth rate of creative capital in our regional economy. Second, we show that despite the presence of increasing returns, the regional economy under study converges to a balanced growth path (BGP). Finally, we compute the growth rates of physical capital and output on the BGP.

Suggested Citation

  • Batabyal, Amitrajeet, 2016. "Increasing Returns in a Model With Creative and Physical Capital: Does a Balanced Growth Path Exist?," MPRA Paper 74107, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:74107
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    References listed on IDEAS

    as
    1. Donovan, Pierce J. & Batabyal, Amitrajeet A., 2015. "On economic growth and investment income taxation in a creative region," International Review of Economics & Finance, Elsevier, vol. 38(C), pages 67-72.
    2. Amitrajeet Batabyal & Peter Nijkamp, 2013. "The creative class, its preferences, and unbalanced growth in an urban economy," Journal of Evolutionary Economics, Springer, vol. 23(1), pages 189-209, January.
    3. Usman, Umer & Batabyal, Amitrajeet A., 2014. "Goods production, learning by doing, and growth in a region with creative and physical capital," International Review of Economics & Finance, Elsevier, vol. 33(C), pages 92-99.
    4. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    5. Roberta Capello & Andrea Caragliu & Peter Nijkamp, 2009. "Territorial Capital and Regional Growth: Increasing Returns in Cognitive Knowledge Use," Tinbergen Institute Discussion Papers 09-059/3, Tinbergen Institute.
    6. Amitrajeet Batabyal & Peter Nijkamp, 2010. "Richard Florida’s creative capital in a trading regional economy: a theoretical investigation," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(2), pages 241-250, April.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Amitrajeet A. Batabyal & Peter Nijkamp, 2018. "A Two-Sector Model of Creative Capital Driven Regional Economic Growth," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(3), pages 831-840, September.

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    More about this item

    Keywords

    Balanced Growth Path; Creative Capital; Creative Region; Economic Growth; Increasing Returns;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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