On optimal growth models when the discount factor is near 1 or equal to 1
The aim of this paper is to fill the gap between intertemporal growth models when the discount factor beta is close to one and when it equals one.We show that the value function and the policy function are continuous with respect both to the discount factor and the initial stock of capitalx0. We prove that the optimal policy g(x0) is differentiable and that Dg(x0) is continuous with respect to (beta, x0). As a by-product, a globalturnpike result is proved.
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Volume (Year): 2 (2006)
Issue (Month): 1 ()
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- Araujo, A & Scheinkman, Jose A, 1977. "Smoothness, Comparative Dynamics, and the Turnpike Property," Econometrica, Econometric Society, vol. 45(3), pages 601-20, April.
- Makoto Yano, 1998. "On the Dual Stability of a von Neumann Facet and the Inefficacy of Temporary Fiscal Policy," Econometrica, Econometric Society, vol. 66(2), pages 427-452, March.
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