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Optimal growth with heterogeneous agents and the twisted turnpike: An example

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  • Robert A. Becker

Abstract

The dynamics of a welfare maximizing, heterogeneous agent, one sector optimal Ramsey model is analyzed assuming two agents, each with a distinct discount factor and log utility. Production is Cobb-Douglas. Explicit time varying policy functions are derived, one for each period. A Twisted Turnpike Property and eventually monotone dynamics are demonstrated to govern the evolution of the economy’s aggregate capital stock.

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File URL: http://hdl.handle.net/10.1111/j.1742-7363.2011.00172.x
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Bibliographic Info

Article provided by The International Society for Economic Theory in its journal International Journal of Economic Theory.

Volume (Year): 8 (2012)
Issue (Month): 1 (03)
Pages: 27-47

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Handle: RePEc:bla:ijethy:v:8:y:2012:i:1:p:27-47

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References

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  1. Dur n, Jorge & Le Van, Cuong, 2003. "Simple Proof Of Existence Of Equilibrium In A One-Sector Growth Model With Bounded Or Unbounded Returns From Below," Macroeconomic Dynamics, Cambridge University Press, Cambridge University Press, vol. 7(03), pages 317-332, June.
  2. Timothy J. Kehoe & David K. Levine & Paul Romer, 1990. "Determinacy of Equilibrium in Dynamic Models with Finitely Many Consumers," Levine's Working Paper Archive 165, David K. Levine.
  3. Timothy J. Kehoe, 1990. "Computation and Multiplicity of Equilibria," Discussion Paper Serie A 309, University of Bonn, Germany.
  4. Cuong LE VAN & Yiannis VALAKIS, 2001. "Existence of a competitive equilibrium in one sector growth model with heterogeneous agents and irreversible investment," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001018, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. Coles, Jeffrey L., 1986. "Equilibrium turnpike theory with time-separable utility," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 10(3), pages 367-394, September.
  6. T. J. Kehoe & D. K. Levine, 1982. "Comparative Statics and Perfect Foresight in Infinite Horizon Economies," Working papers 312, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Bliss, Christopher, 1999. "The Real Rate of Interest: A Theoretical Analysis," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 15(2), pages 46-58, Summer.
  8. Becker, Robert A. & Foias, Ciprian, 1987. "A characterization of Ramsey equilibrium," Journal of Economic Theory, Elsevier, vol. 41(1), pages 173-184, February.
  9. Takashi Kamihigashi, 2007. "On the Principle of Optimality for Nonstationary Deterministic Dynamic Programming," Discussion Paper Series, Research Institute for Economics & Business Administration, Kobe University 200, Research Institute for Economics & Business Administration, Kobe University.
  10. Coles, Jeffrey Link, 1985. "Equilibrium Turnpike Theory with Constant Returns to Scale and Possible Heterogeneous Discount Factors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 671-79, October.
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Cited by:
  1. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2013. "On Existence and Bubbles of Ramsey Equilibrium with Borrowing Constraints," Working Papers halshs-00793530, HAL.
  2. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2013. "On Existence and Bubbles of Ramsey Equilibrium with Borrowing Constraints," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00793530, HAL.
  3. repec:ipg:wpaper:4 is not listed on IDEAS
  4. Stefano Bosi & Cuong Le Van, 2011. "On the existence of a Ramsey equilibrium with endogenous labor supply and borrowing constraints," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 11045, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  5. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2013. "On existence, effciency and bubbles of Ramsey equilibrium with borrowing constraints," Working Papers 15, Development and Policies Research Center (DEPOCEN), Vietnam.
  6. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2014. "On existence and bubbles of Ramsey equilibrium with borrowing constraints," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 14040, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  7. repec:hal:psewpa:halshs-00793530 is not listed on IDEAS
  8. repec:ipg:wpaper:201404 is not listed on IDEAS
  9. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2014. "On existence and bubbles of Ramsey equilibrium with borrowing constraints," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01020635, HAL.

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