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Non-convex aggregative technology and optimal economic growth

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Author Info

  • Manh Hung Nguyen

    ()
    (Université de Laval)

  • Cuong Le Van

    ()
    (CERMSEM)

  • Philippe Michel

    (GREQAM et EUREQua)

Abstract

This paper examines a model of optimal growth where the aggregation of two separate well behaved and concave production technologies exhibits a basic non-convexity. Multiple equilibria prevail in an intermediate range of interest rate. However, we show that the optimal paths monotonically converge to the one single appropriate equilibrium steady state.

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File URL: ftp://mse.univ-paris1.fr/pub/mse/cahiers2005/B05095.pdf
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Bibliographic Info

Paper provided by Université Panthéon-Sorbonne (Paris 1) in its series Cahiers de la Maison des Sciences Economiques with number b05095.

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Length: 12 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:mse:wpsorb:b05095

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Keywords: Non-convex aggregative technology; optimal economic growth; steady state.;

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References

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  1. Takashi Kamihigashi & Santanu Roy, 2006. "Dynamic optimization with a nonsmooth, nonconvex technology: the case of a linear objective function," Economic Theory, Springer, vol. 29(2), pages 325-340, October.
  2. Askenazy, Philippe & Le Van, 1997. "A model of optimal growth strategy," CEPREMAP Working Papers (Couverture Orange) 9707, CEPREMAP.
  3. Majumdar, Mukul & Mitra, Tapan, 1983. "Dynamic Optimization with a Non-Convex Technology: The Case of a Linear Objective Function," Review of Economic Studies, Wiley Blackwell, vol. 50(1), pages 143-51, January.
  4. Amir, Rabah, 1996. "Sensitivity analysis of multisector optimal economic dynamics," Journal of Mathematical Economics, Elsevier, vol. 25(1), pages 123-141.
  5. Dechert, W. Davis & Nishimura, Kazuo, 1983. "A complete characterization of optimal growth paths in an aggregated model with a non-concave production function," Journal of Economic Theory, Elsevier, vol. 31(2), pages 332-354, December.
  6. Majumdar, Mukul & Mitra, Tapan, 1982. "Intertemporal allocation with a non-convex technology: The aggregative framework," Journal of Economic Theory, Elsevier, vol. 27(1), pages 101-136, June.
  7. Mukul Majumdar & Manfred Nermuth, 1982. "Dynamic Optimization in Non-Convex Models with Irreversible Investment: Monotonicity and Turnpike Results (Now published in Zeitschrift für National-Ökonomie (Journal of National Economics), vol.42,," STICERD - Theoretical Economics Paper Series 40, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  8. Takashi Kamihigashi & Santanu Roy, 2005. "A nonsmooth, nonconvex model of optimal growth," Discussion Paper Series 173, Research Institute for Economics & Business Administration, Kobe University.
  9. Dana, Rose-Anne & Le Van, Cuong, 2003. "Dynamic Programming in Economics," Economics Papers from University Paris Dauphine 123456789/416, Paris Dauphine University.
  10. Skiba, A K, 1978. "Optimal Growth with a Convex-Concave Production Function," Econometrica, Econometric Society, vol. 46(3), pages 527-39, May.
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Cited by:
  1. Akao, Ken-Ichi & Kamihigashi, Takashi & Nishimura, Kazuo, 2011. "Monotonicity and continuity of the critical capital stock in the Dechert–Nishimura model," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 677-682.
  2. Cuong Le Van & Cagri Saglam & Agah Turan, 2014. "Optimal Growth Strategy Under Dynamic Threshold," Working Papers 2014-123, Department of Research, Ipag Business School.

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