Takashi Kamihigashi (Research Institute for Economics and Business Administration, Kobe University)
Abstract
This paper shows that in stochastic one-sector growth models, if the production function does not satisfy the Inada condition at zero, any feasible path converges to zero with probability one provided that the shocks are sufficiently volatile. This result seems significant since, as we argue, the Inada condition at zero is difficult to justify on economic grounds. Our convergence result is extended to the case of a nonconcave production function. The generalized result applies to a wide range of stochastic growth models, including stochastic endogenous growth models, overlapping generations models, and models with nonconcave production functions.
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Publisher Info
Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number
140.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
de Hek, Paul & Roy, Santanu, 2001.
"On Sustained Growth under Uncertainty,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(3), pages 801-13, August.
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