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Monotonicity and Continuity of the Critical Capital Stock in the Dechert-Nishimura Model

  • Ken-Ichi Akao

    (School of Social Sciences, Waseda University, Japan)

  • Takashi Kamihigashi

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

  • Kazuo Nishimura

    (KIER, Kyoto University, Japan)

We show that the critical capital stock of the Dechert-Nishimura (1983) model is a decreasing and continuous function of the discount factor. We also show that the critical capital stock merges with a nonzero steady state as the discount factor decreases to a certain boundary value, and that the critical capital stock converges to the minimum sustainable capital stock as the discount factor increases to another boundary value.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2011-20.pdf
File Function: Revised version, 2011
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Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2011-20.

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Length: 19 pages
Date of creation: Apr 2011
Date of revision: Sep 2011
Handle: RePEc:kob:dpaper:dp2011-20
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  7. Levy, Amnon & Neri, Frank, 2004. "Macroeconomic Aspects of Substance Abuse: Diffusion, Productivity and Optimal Control," Economics Working Papers wp04-22, School of Economics, University of Wollongong, NSW, Australia.
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