Khan, M. Ali (Johns Hopkins U) Mitra, Tapan (Cornell U)
Abstract
In this paper, we offer an instance of (topologically) chaotic optimal behavior in a twosector model with irreversible investment, originally formulated by Robinson, Solow and Srinivasan. Our result follows from the theory of turbulence in non-linear dynamical systems, and relies only on the existence of a continuous optimal policy function. The fact that there is a unique optimal program from each initial stock when future utilities are discounted by a factor smaller than the labor-capital ratio may be of independent interest.
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Paper provided by Cornell University, Center for Analytic Economics in its series Working Papers with number
04-18.
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Find related papers by JEL classification: C62 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Existence and Stability Conditions of Equilibrium D90 - Microeconomics - - Intertemporal Choice and Growth - - - General O21 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
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