Imbalance Effects in the Lucas Model: an Analytical Exploration

Boucekkine, Raouf;Ruiz Tamarit, Ramon
(2004) The B.E. Journal of Macroeconomics — Vol. 4, n° 1, p. 1232 (2004)

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  • Boucekkine, RaoufUCLouvain
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  • Ruiz Tamarit, Ramon
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Abstract
In this note, we extend Xie (JET, 1994) to solve analytically the Lucas model with a weak externality in a specific parametric case. In particular, we characterize the shape of imbalance effects in this model. Our results are mostly consistent with the findings of the related computational literature. Among other analytical findings, we prove that, while U-shaped imbalance effects are not apparent in the Lucas model for the growth rate of output per capita, the level of such a variable may exhibit this shape.
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Boucekkine, R., & Ruiz Tamarit, R. (2004). Imbalance Effects in the Lucas Model: an Analytical Exploration. The B.E. Journal of Macroeconomics, 4(1), 1232. https://doi.org/10.2202/1534-5998.1232 (Original work published 2004)