The Behavior Of The Saving Rate In The Neoclassical Optimal Growth Model
AbstractThis paper characterizes analytically the saving rate in the Ramsey-Cass-Koopmans model with a general production function when there exists both exogenous and endogenous growth. It points out conditions involving the share of capital and the elasticities of factor and intertemporal substitution under which the saving rate path to its steady-state value exhibits overshooting, undershooting, or is monotonic. Simulations illustrate these interesting dynamics. The paper also identifies the general class of production functions that render the saving rate constant along the entire transition path and hence make the Ramsey-Cass-Koopmans model isomorphic to that of Solow-Swan.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Macroeconomic Dynamics.
Volume (Year): 14 (2010)
Issue (Month): 04 (September)
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Other versions of this item:
- Anastastia Litina & Theodore Palivos, 2008. "The Behaviour of the Saving Rate in the Neoclassical Optimal Growth Model," Discussion Paper Series 2008_05, Department of Economics, University of Macedonia, revised Jun 2008.
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
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