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Knife-edge conditions in the modeling of long-run growth regularities

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  • Growiec, Jakub

Abstract

Balanced (exponential) growth cannot be generalized to a concept which would not require knife-edge conditions to be imposed on dynamic models. Already the assumption that a solution to a dynamical system (i.e. time path of an economy) satisfies a given functional regularity (e.g. quasi-arithmetic, logistic, etc.) imposes at least one knife-edge assumption on the considered model. Furthermore, it is always possible to find divergent and qualitative changes in dynamic behavior of the model – strong enough to invalidate its long-run predictions – if a certain parameter is infinitesimally manipulated. In this sense, dynamics of all growth models are fragile and "unstable".

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9956.

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Date of creation: 31 Jul 2008
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Handle: RePEc:pra:mprapa:9956

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Keywords: knife-edge condition; balanced growth; regular growth; bifurcation; growth model; long run; long-run dynamics;

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References

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Cited by:
  1. Li, Defu & Huang, Jiuli & Zhou, Ying, 2013. "Revisting the Steady-State Equilibrium Conditions of Neoclassical Growth Models," MPRA Paper 55045, University Library of Munich, Germany, revised May 2013.
  2. Christian Groth & Karl-Josef Koch & Thomas Steger, 2010. "When economic growth is less than exponential," Economic Theory, Springer, vol. 44(2), pages 213-242, August.

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