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Stochastic Versions of Turnpike Theorems in the Sense of Uniform Topology

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  • Darong Dai

    (School of Business, Nanjing University)

Abstract

In this paper, a stochastic endogenous aggregative growth model is constructed and two main results are established, based on endogenous horizon of the economy and endogenous terminal capital stock, which is also efficient capital accumulation in some sense. First, strong turnpike theorems under uncertainty and in the sense of uniform topology are obtained; second, inefficacy of temporary fiscal policy, which is chosen to be capital income taxation, has been demonstrated in comparatively weak conditions different from Yano (1998)'s.

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Bibliographic Info

Article provided by Society for AEF in its journal Annals of Economics and Finance.

Volume (Year): 13 (2012)
Issue (Month): 2 (November)
Pages: 381-423

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Handle: RePEc:cuf:journl:y:2012:v:13:i:2:n:6:dai

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Related research

Keywords: Stochastic endogenous growth; Uniform-topology turnpike theorems; Endogenous terminal stock; Endogenous welfare function; Capital income taxation;

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References

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  1. Philippe Aghion, 2004. "Growth and Development: A Schumpeterian Approach," Annals of Economics and Finance, Society for AEF, vol. 5(1), pages 1-25, May.
  2. Yano, Makoto, 1984. "Competitive Equilibria on Turnpikes in a McKenzie Economy, I: A Neighborhood Turnpike Theorem," 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. 25(3), pages 695-717, October.
  3. Liutang Gong & Heng-fu Zou, 2011. "Fiscal Federalism, Public Capital Formation, and Endogenous Growth," CEMA Working Papers, China Economics and Management Academy, Central University of Finance and Economics 488, China Economics and Management Academy, Central University of Finance and Economics.
  4. Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
  5. 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.
  6. Araujo, A & Scheinkman, Jose A, 1977. "Smoothness, Comparative Dynamics, and the Turnpike Property," Econometrica, Econometric Society, Econometric Society, vol. 45(3), pages 601-20, April.
  7. Lionel W. McKenzie, 2012. "turnpike theory," The New Palgrave Dictionary of Economics, Palgrave Macmillan, Palgrave Macmillan.
  8. Sergio T. Rebelo, 1990. "Long Run Policy Analysis and Long Run Growth," NBER Working Papers 3325, National Bureau of Economic Research, Inc.
  9. Merton, Robert C., 1973. "An asymptotic theory of growth under uncertainty," Working papers 673-73., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  10. Liutang Gong & Heng-fu Zou, 2000. "Foreign Aid Reduces Domestic Capital Accumulation and Increases Foreign Borrowing: A Theoretical Analysis," Annals of Economics and Finance, Society for AEF, vol. 1(1), pages 147-163, May.
  11. Makoto Yano, 1998. "On the Dual Stability of a von Neumann Facet and the Inefficacy of Temporary Fiscal Policy," Econometrica, Econometric Society, Econometric Society, vol. 66(2), pages 427-452, March.
  12. Bewley, Truman, 1982. "An integration of equilibrium theory and turnpike theory," Journal of Mathematical Economics, Elsevier, vol. 10(2-3), pages 233-267, September.
  13. Yano, Makoto, 1984. "The turnpike of dynamic general equilibrium paths and its insensitivity to initial conditions," Journal of Mathematical Economics, Elsevier, vol. 13(3), pages 235-254, December.
  14. Yano, Makoto, 1985. "Competitive Equilibria on Turnpikes in a McKenzie Economy, II: An Asymptotic Turnpike Theorem," 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 661-69, October.
  15. McKenzie, Lionel W., 1982. "A primal route to the Turnpike and Liapounov stability," Journal of Economic Theory, Elsevier, Elsevier, vol. 27(1), pages 194-209, June.
  16. Joshi, Sumit, 1997. "Turnpike Theorems in Nonconvex Nonstationary Environments," 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. 38(1), pages 225-48, February.
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Cited by:
  1. Dai, Darong, 2012. "On the existence and stability of Pareto optimal endogenous matching with fairness," MPRA Paper 40457, University Library of Munich, Germany.
  2. Darong Dai, 2013. "Wealth Martingale and Neighborhood Turnpike Property In Dynamically Complete Market With Heterogeneous Investors," Economic Research Guardian, Weissberg Publishing, Weissberg Publishing, vol. 3(2), pages 86-110, December.
  3. Darong Dai, 2013. "Modeling The Minimum Time Needed To Economic Maturity," Economic Research Guardian, Weissberg Publishing, Weissberg Publishing, vol. 3(1), pages 2-21, June.
  4. Dai, Darong, 2012. "Comparative Studies on Cooperative Stochastic Differential Game and Dynamic Sequential Game of Economic Maturity," MPRA Paper 44339, University Library of Munich, Germany.
  5. Dai, Darong, 2013. "Cooperative economic growth," Economic Modelling, Elsevier, Elsevier, vol. 33(C), pages 407-415.
  6. Dai, Darong, 2012. "A Robust Turnpike Deduced by Economic Maturity," MPRA Paper 48818, University Library of Munich, Germany.

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