International Journal of Business and Economics Volume 5, No. 3 December, 2006

A Note on the Inclusion of Human Capital in the Lucas Model

Bidisha Chakraborty

Vijaygarh Jotish Ray College, India and Economic Research Unit, Indian Statistical Institute, India

Manash Ranjan Gupta

Economic Research Unit, Indian Statistical Institute, India

Abstract

We include human capital in the utility function in an otherwise standard Lucas (1988) model of endogenous growth and show that there may be multiple steady-state equilibria. We also analyze the transitional dynamic properties of this model.

Keywords：human capital, endogenous growth, multiple steady-state equilibria, saddle path.

JEL Classifications：C62, J24, O41.

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