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On choice of technique in the Robinson-Solow-Srinivasan model

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  • M. Ali Khan
  • Tapan Mitra

Abstract

We report results on the optimal \choice of technique' in a model originally formulated by Robinson, Solow and Srinivasan (henceforth, the RSS model) and further discussed by Okishio and Stiglitz. By viewing this vintage-capital model without discounting as a speci c instance of the general theory of intertemporal resource allocation associated with Brock, Gale and McKenzie, we resolve longstanding conjectures in the form of theorems on the existence and price support of optimal paths, and of conditions suÆcient for the optimality of a policy rst identi ed by Stiglitz. We dispose of the necessity of these conditions in surprisingly simple examples of economies in which (i) an optimal path is periodic, (ii) a path following Stiglitz' policy is bad, and (iii) there is optimal investment in di erent vintages at di erent times. (129 words)
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  • M. Ali Khan & Tapan Mitra, 2005. "On choice of technique in the Robinson-Solow-Srinivasan model," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(2), pages 83-110.
  • Handle: RePEc:bla:ijethy:v:1:y:2005:i:2:p:83-110
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    1. Cass, David & Stiglitz, Joseph E, 1969. "The Implications of Alternative Saving and Expectations Hypotheses for Choices of Technique and Patterns of Growth," Journal of Political Economy, University of Chicago Press, vol. 77(4), pages 586-627, Part II, .
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    4. Leonardo Rocha Souza, 2005. "A Note On Chambers'S "Long Memory And Aggregation In Macroeconomic Time Series"," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 1059-1062, August.
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    10. Bardhan, Pranab K, 1971. "Optimum Growth and Allocation of Foreign Exchange," Econometrica, Econometric Society, vol. 39(6), pages 955-971, November.
    11. Costa, Carlos Eugênio da, 2003. "Risk sharing and the household collective model," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 497, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    12. Dutta, Prajit K. & Mitra, Tapan, 1989. "Maximum theorems for convex structures with an application to the theory of optimal intertemporal allocation," Journal of Mathematical Economics, Elsevier, vol. 18(1), pages 77-86, February.
    13. Mitra, Tapan & Wan, Henry Jr., 1986. "On the faustmann solution to the forest management problem," Journal of Economic Theory, Elsevier, vol. 40(2), pages 229-249, December.
    14. Costa, Carlos Eugênio da, 2003. "Normality under uncertainty," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 496, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    15. Costa, Carlos Eugênio da, 2003. "Optimal taxation with gradual learning of types," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 499, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    16. Ferreira, Pedro Cavalcanti & Pessôa, Samuel de Abreu, 2003. "The costs of education, longevity and the poverty of nations," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 472, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    17. Neri, Marcelo Côrtes & Soares, Wagner Lopes, 2003. "Idade, incapacidade e a inflação do número de pessoas com deficiência," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 490, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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    20. Stiglitz, Joseph E, 1970. "Reply to Mrs. Robinson on the Choice of Technique," Economic Journal, Royal Economic Society, vol. 80(318), pages 420-422, June.
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    Citations

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    Cited by:

    1. M. Khan & Alexander Zaslavski, 2007. "On a Uniform Turnpike of the Third Kind in the Robinson-Solow-Srinivasan Model," Journal of Economics, Springer, vol. 92(2), pages 137-166, October.
    2. Ali Khan, M. & Piazza, Adriana, 2012. "On the Mitra–Wan forestry model: A unified analysis," Journal of Economic Theory, Elsevier, vol. 147(1), pages 230-260.
    3. Monteiro, Paulo Klinger, 2006. "The set of equilibria of first-price auctions," Journal of Mathematical Economics, Elsevier, vol. 42(3), pages 364-372, June.
    4. Tavani, Daniele, 2008. "Optimal Induced Innovation and Growth with Congestion of a Limited Natural Resource," MPRA Paper 11525, University Library of Munich, Germany.
    5. Khan, M. Ali & Mitra, Tapan, 2005. "On topological chaos in the Robinson-Solow-Srinivasan model," Economics Letters, Elsevier, vol. 88(1), pages 127-133, July.
    6. Cavalcanti Ferreira, Pedro & Facchini, Giovanni, 2005. "Trade liberalization and industrial concentration: Evidence from Brazil," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 432-446, May.
    7. Kenji Sato & Makoto Yano, 2013. "Optimal ergodic chaos under slow capital depreciation," International Journal of Economic Theory, The International Society for Economic Theory, vol. 9(1), pages 57-67, March.
    8. Minako Fujio, 2009. "Optimal Transition Dynamics In The Leontief Two-Sector Growth Model With Durable Capital: The Case Of Capital Intensive Consumption Goods," The Japanese Economic Review, Japanese Economic Association, vol. 60(4), pages 490-511.
    9. M. Khan & Alexander Zaslavski, 2010. "On locally optimal programs in the Robinson–Solow–Srinivasan model," Journal of Economics, Springer, vol. 99(1), pages 65-92, February.
    10. Khan, M. Ali, 2016. "On a forest as a commodity and on commodification in the discipline of forestry," Forest Policy and Economics, Elsevier, vol. 72(C), pages 7-17.
    11. M. Ali Khan & Tapan Mitra, 2007. "Optimal Growth In A Two-Sector Rss Model Without Discounting: A Geometric Investigation," The Japanese Economic Review, Japanese Economic Association, vol. 58(2), pages 191-225.
    12. Khalifa, Sherif, 2011. "Undiscounted optimal growth with consumable capital and labor-intensive consumption goods," Economic Modelling, Elsevier, vol. 28(4), pages 1673-1682, July.
    13. repec:spr:joptap:v:145:y:2010:i:3:d:10.1007_s10957-010-9677-2 is not listed on IDEAS
    14. M. Ali Khan & Adriana Piazza, 2010. "On uniform convergence of undiscounted optimal programs in the Mitra-Wan forestry model: The strictly concave case," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(1), pages 57-76.
    15. Khan, M. Ali & Zaslavski, Alexander J., 2009. "On existence of optimal programs: The RSS model without concavity assumptions on felicities," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 624-633, September.

    More about this item

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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