Spectral and Persistence Properties of Cyclical Growth

This article investigates the cyclical properties of an endogenous growth model. An explicit solution is derived which permits the full characterization of the cyclical as well as the long{run properties of the model. Using spectral, autocorrelation and impulse response functions, we show that introducing endogenous growth overcomes some of the main shortcomings of RBC models. In particular, the model can generate positive autocorrelation of output growth when endogenous growth dominates the dynamics. Moreover, the model exhibits the hump{shaped pattern of impulse response functions of the trend{reverting component of output. to two anonymous referees for their comments. I have also beneeted from discussion with P. F eve, J.O.