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On the Stability of Balanced Growth

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Author Info

  • Jan Wenzelburger

    ()
    (Keele University, Centre for Economic Research and School of Economic and Management Studies)

  • Volker Böhm

    (Dept. of Business Administration and Economics, Bielefeld University,)

  • Thorsten Pampel

    (Dept. of Business Administration and Economics, Bielefeld University,)

Abstract

Common folklore in growth theory suggests that the stability of balanced growth paths in the capital-labor space is essentially guaranteed by conditions which imply stability of the corresponding steady states of the models in intensity form. We show by means of simple examples that, in general, these well-known conditions are only necessary. For a class of deterministic growth models with discrete time we provide new structural insights into the nature of this phenomenon by stating additional requirements that ensure stability of balanced growth paths in the original capital-labor space. We introduce a notion of path-wise convergence for stochastic growth models and generalize our sufficient conditions to the stochastic case.

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Bibliographic Info

Paper provided by Centre for Economic Research, Keele University in its series Keele Economics Research Papers with number KERP 2007/09.

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Length: 25 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:kee:kerpuk:2007/09

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Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
Phone: +44 (0)1782 584581
Fax: +44 (0)1782 717577
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Web page: http://www.keele.ac.uk/depts/ec/cer/
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Postal: Centre for Economic Research, Research Institute for Public Policy and Management, Keele University, Staffordshire ST5 5BG - United Kingdom
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Web: http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm

Related research

Keywords: Balanced growth; stability conditions; stochastic growth; pathwise convergence.;

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Cited by:
  1. Palmisani, Cesare, 2008. "Una rassegna su alcuni modelli di crescita economica tipo Solow con dinamica caotica," MPRA Paper 9506, University Library of Munich, Germany.
  2. Thorsten Pampel, 2009. "On the Dynamics of Basic Growth Models: Ratio Stability vs. Convergence and Divergence in State Space," German Economic Review, Verein für Socialpolitik, vol. 10, pages 384-400, November.

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