Undiscounted optimal growth with consumable capital and labor-intensive consumption goods
AbstractThis paper presents a complete characterization of the optimal policy in a two sector undiscounted growth model. The model is an extension of the Leontief two sector model, which analyzes the optimal allocation of capital and labor to a consumption good sector and an investment good sector. The paper extends this framework to include consumable capital. Thus, the planner has preferences over the consumption good and the consumable capital. Future welfare levels are treated equally as current ones. Geometric techniques are applied to characterize the optimal policy if the consumption good is labor-intensive. The results suggest that if the initial capital stock is above a threshold level, that depends upon the consumption of capital, every optimal program is monotonic, converges to the golden rule stock in a finite number of periods, and undergoes either unemployment or excess capacity of capital.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 28 (2011)
Issue (Month): 4 (July)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/30411
Optimal program Overtaking criterion Golden rule stock Value-loss lines;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nishimura, Kazuo & Yano, Makoto, 1995. "Nonlinear Dynamics and Chaos in Optimal Growth: An Example," Econometrica, Econometric Society, vol. 63(4), pages 981-1001, July.
- Fujio, Minako, 2008. "Undiscounted optimal growth in a Leontief two-sector model with circulating capital: The case of a capital-intensive consumption good," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 420-436, May.
- Khan, M. Ali & Mitra, Tapan, 2004.
"On Choice of Technique in the Robinson-Solow-Srinivasan Model,"
04-13, Cornell University, Center for Analytic Economics.
- M. Ali Khan & Tapan Mitra, 2005. "On choice of technique in the Robinson-Solow-Srinivasan model," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(2), pages 83-110.
- Khan, M. Ali, 2003. "On choice of technique in the Robinson-Solow-Srinivasan model," Economics Working Papers (Ensaios Economicos da EPGE) 504, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Minako Fujio, 2009. "Optimal Transition Dynamics In The Leontief Two-Sector Growth Model With Durable Capital: The Case Of Capital Intensive Consumption Goods," The Japanese Economic Review, Japanese Economic Association, vol. 60(4), pages 490-511.
- M. Ali Khan & Tapan Mitra, 2007. "Optimal Growth In A Two-Sector Rss Model Without Discounting: A Geometric Investigation," The Japanese Economic Review, Japanese Economic Association, vol. 58(2), pages 191-225.
- Minako Fujio, 2005. "The Leontief Two-sector Model and Undiscounted Optimal Growth with Irreversible Investment: The Case of Labor-intensive Consumption Goods," Journal of Economics, Springer, vol. 86(2), pages 145-159, November.
- Khalifa, Sherif, 2013. "Undiscounted optimal growth with consumable capital and capital-intensive consumption goods," Mathematical Social Sciences, Elsevier, vol. 65(2), pages 118-135.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.