Modeling The Minimum Time Needed To Economic Maturity
A general equilibrium model has been constructed in a stochastic endogenous growth economy with the capital-labor ratio driven by an Itô-Lévy diffusion process. In particular, formal definition of the minimum-time needed to economic maturity is identified in the model and closed-form solutions of optimal savings strategy and optimal tax rates are established when the representative agent is assumed to exhibit log preference and there is a benevolent government in the economy. Moreover, the minimum-time needed to economic maturity is explicitly derived in the sense of sub-game perfect Nash equilibrium and one can further proceed to comparative static analysis with respect to the relevant parameters of the underlying economy such as the subject discount factor, the initial level of capital stock per capita, the utility-optimal and sustainable terminal path level of capital stock per capita, the natural growth rate of population, and the exogenous level of government spending. Finally, it is worth emphasizing that we focus on underdeveloped economies such as China and the present exploration presents a baseline mathematical model for studying the optimal policies needed to reach economic maturity as soon as possible.
Volume (Year): 3 (2013)
Issue (Month): 1 (June)
|Contact details of provider:|| |
When requesting a correction, please mention this item's handle: RePEc:wei:journl:v:3:y:2013:i:1:p:2-21. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mihai Mutascu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.