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Sustainability in the Stochastic Ramsey Model

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  • Rabi Bhattacharya
  • Hyeonju Kim
  • Mukul Majumdar

Abstract

In this paper we provide a self-contained exposition of the problem of sustaining a constant consumption level in a Ramsey model. Our focus is on the case in which the output capital-ratio is random. After a brief review of the known results on the probabilities of sustaining a target consumption from an initial stock, we present some new results on estimating the probabilities by using Chebyshev inequalities. Some numerical calculations for these estimates are also provided.

Suggested Citation

  • Rabi Bhattacharya & Hyeonju Kim & Mukul Majumdar, 2015. "Sustainability in the Stochastic Ramsey Model," Papers 1511.07419, arXiv.org.
    • Handle: RePEc:arx:papers:1511.07419
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    References listed on IDEAS

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    1. Majumdar, Mukul & Radner, Roy, 1991. "Linear Models of Economic Survival under Production Uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 1(1), pages 13-30, January.
    2. D. McFadden, 1967. "The Evaluation of Development Programmes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(1), pages 25-50.
    3. Mukul Majumdar & Roy Radner, 1992. "Survival under Production Uncertainty," Palgrave Macmillan Books, in: Mukul Majumdar (ed.), Equilibrium and Dynamics, chapter 8, pages 179-200, Palgrave Macmillan.
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    Cited by:

    1. Phoebe Koundouri & Georgios I. Papayiannis & Athanasios Yannacopoulos, 2022. "Optimal Control Approaches to Sustainability under Uncertainty," DEOS Working Papers 2215, Athens University of Economics and Business.
    2. Rabi Bhattacharya & Mukul Majumdar, 2021. "Equity and Sustainability: An Exposition," Studies in Microeconomics, , vol. 9(1), pages 92-104, June.

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