A Closed-form Solution to the Transitional Dynamics of the Lucas-Uzawa Model

Constantin Chilarescu, Department of Economics, West University of Timisoara

Abstract

This paper studies how the intertemporal allocation determines the transitional dynamics to a given steady state and the long-term growth of an economy. Our main contribution consists in determining the solutions path for all the variables of the model, under fairly general conditions on σ and β.