Transition dynamics in an AK growth model under wage rigidity

► The AK endogenous growth model with persistent unemployment is analyzed. ► The balanced growth path is either unique or there are two balanced growth paths. ► If the balanced growth path is unique, it is saddle point stable. ► In the case of non-uniqueness, one path is a saddle point, and the other is stable or unstable. ► A Hopf bifurcation may occur, generating persistent growth cycles.