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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.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 147 (2012)
Issue (Month): 2 ()
Pages: 802-832

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Handle: RePEc:eee:jetheo:v:147:y:2012:i:2:p:802-832

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Web page: http://www.elsevier.com/locate/inca/622869

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Keywords: Optimal growth; New growth theory; Homogeneous programming; Turnpike; Balanced growth path; Global stability; von Neumann equilibrium;

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Cited by:
  1. Acemoglu, Daron, 2012. "Introduction to economic growth," Journal of Economic Theory, Elsevier, vol. 147(2), pages 545-550.

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