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Global stability and the “turnpike” in optimal unbounded growth models

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  • Jensen, Martin Kaae

Abstract

This study proves various global stability results for unbounded optimal growth models. The main theorem states that any optimal path will eventually be in the neighborhood of a balanced growth path if future utility is sufficiently weakly discounted. The assumptions allow for non-smooth technologies, joint production, and production in independent sectors. Hence, the results form the integration of new growth and turnpike theory sought by McKenzie (1998) [31] in his Ely lecture. The applicability of the results is exemplified by means of a number of cases from growth theory and other areas of economics.

Suggested Citation

  • Jensen, Martin Kaae, 2012. "Global stability and the “turnpike” in optimal unbounded growth models," Journal of Economic Theory, Elsevier, vol. 147(2), pages 802-832.
    • Handle: RePEc:eee:jetheo:v:147:y:2012:i:2:p:802-832
    DOI: 10.1016/j.jet.2010.07.010
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    2. Acemoglu, Daron, 2012. "Introduction to economic growth," Journal of Economic Theory, Elsevier, vol. 147(2), pages 545-550.

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    More about this item

    Keywords

    Optimal growth; New growth theory; Homogeneous programming; Turnpike; Balanced growth path; Global stability; von Neumann equilibrium;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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