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An Experimental Test of an Optimal Growth Model

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  • Vivian Lei
  • Charles N. Noussair

Abstract

This paper describes the design and behavior of an experimental economy with the structure of the Ramsey-Cass-Koopmans model of optimal growth. The experiment includes three different implementations of the model: a decentralized implementation with multiple agents and a market for capital, a treatment where individual subjects are placed in the role of social planners, and a treatment where the social planner consists of five agents making a joint decision. The findings highlight the role of market institutions in facilitating convergence to the optimal steady state. (JEL C91, C92, O40)

Suggested Citation

  • Vivian Lei & Charles N. Noussair, 2002. "An Experimental Test of an Optimal Growth Model," American Economic Review, American Economic Association, vol. 92(3), pages 549-570, June.
    • Handle: RePEc:aea:aecrev:v:92:y:2002:i:3:p:549-570
    Note: DOI: 10.1257/00028280260136246
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    More about this item

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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