On optimal growth models when the discount factor is near 1 or equal to 1
AbstractThe aim of this paper is to fill the gap between intertemporal growth models when the discount factor beta is close to one and when it equals one.We show that the value function and the policy function are continuous with respect both to the discount factor and the initial stock of capitalx0. We prove that the optimal policy g(x0) is differentiable and that Dg(x0) is continuous with respect to (beta, x0). As a by-product, a globalturnpike result is proved.
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Date of creation: Mar 2006
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Publication status: Published, International Journal of Economic Theory, 2006, 2, 1, 55-76
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Optimal growth; discount factor; value function; policy function; differentiability; turnpike.;
Other versions of this item:
- Cuong Le Van & Lisa Morhaim, 2006. "On optimal growth models when the discount factor is near 1 or equal to 1," International Journal of Economic Theory, The International Society for Economic Theory, The International Society for Economic Theory, vol. 2(1), pages 55-76.
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