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Recursive Utility and Turnpike Theory for GMM Thompson Aggregators

Author

Listed:
  • Robert A. Becker

    (Indiana University)

  • Juan Pablo Rincon-Zapatero

    (Universidad Carlos III de Madrid)

Abstract

The existence of a unique optimum, a unique optimal stationary program, and a turnpike theorem are demonstrated for a neoclassical one sector optimal growth model. The plannerís allocation problem is formulated as a discrete time deterministic, infinite horizon programming model. The production sector is subject to diminishing marginal returns to capital. The plannerís objective function is derived from a Generalized Marinacci and Montrucchio (GMM) Thompson aggregator preference. A given Thompson aggregator may be associated with many intertemporal utility functions (which may not be ordinally equivalent). The choice of one of these representations over another is shown to be a matter of mathematical tractability. There is an observational equivalence between those alternative objective functions: the qualitative features of the optimal solution do not depend on the particular utility function representation of the underlying Thompson aggregator preference structure.

Suggested Citation

  • Robert A. Becker & Juan Pablo Rincon-Zapatero, 2020. "Recursive Utility and Turnpike Theory for GMM Thompson Aggregators," CAEPR Working Papers 2020-001, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    • Handle: RePEc:inu:caeprp:2020001
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    File URL: https://caepr.indiana.edu/RePEc/inu/caeprp/caepr2020-001.pdf
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    Cited by:

    1. Becker, Robert A. & Rincón-Zapatero, Juan Pablo, 2021. "Thompson aggregators, Scott continuous Koopmans operators, and Least Fixed Point theory," Mathematical Social Sciences, Elsevier, vol. 112(C), pages 84-97.

    More about this item

    Keywords

    Recursive Utility; Thompson Aggregators; Generalized Marinacci Montrucchio Aggregators; Koopmans Equation; Extremal Fixed Points; Turnpike Theorem; Discounted Golden-Rule; Observational Equivalence Theorem;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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