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Non-Convex Aggregate Technology and Optimal Economic Growth

  • N.M. Hung
  • C. Le Van
  • P. Michel

This paper examines a model of optimal growth where the agregation of two separate well behaved and concave production technologies exhibits a basic non-convexity. Multiple equilibria prevail in an intermediate range of interest rate. However, we show that the optimal paths monotonically converge to the one single appropriate equilibrium steady state.

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File URL: http://www.ecn.ulaval.ca/w3/recherche/cahiers/2006/0603.pdf
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Paper provided by Université Laval - Département d'économique in its series Cahiers de recherche with number 0603.

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Date of creation: 2006
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Handle: RePEc:lvl:laeccr:0603
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  1. Dana, Rose-Anne & Le Van, Cuong, 2003. "Dynamic Programming in Economics," Economics Papers from University Paris Dauphine 123456789/416, Paris Dauphine University.
  2. Takashi Kamihigashi & Santanu Roy, 2003. "A Nonsmooth, Nonconvex Model of Optimal Growth," Discussion Paper Series 158, Research Institute for Economics & Business Administration, Kobe University.
  3. Askenazy, Philippe & Le Van, Cuong, 1999. "A Model of Optimal Growth Strategy," Journal of Economic Theory, Elsevier, vol. 85(1), pages 24-51, March.
  4. Amir, R., 1991. "Sensitivity analysis of multi-sector optimal economic dynamics," CORE Discussion Papers 1991006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Mukul Majumdar & Manfred Nermuth, 1982. "Dynamic Optimization in Non-Convex Models with Irreversible Investment: Monotonicity and Turnpike Results (Now published in Zeitschrift für National-Ökonomie (Journal of National Economics), vol.42, N," STICERD - Theoretical Economics Paper Series 40, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  6. Takashi Kamihigashi & Santanu Roy, 2005. "Dynamic optimization with a nonsmooth, nonconvex technology: The case of a linear objective function," Discussion Paper Series 175, Research Institute for Economics & Business Administration, Kobe University.
  7. Dana, Rose-Anne & Le Van, Cuong, 2003. "Dynamic Programming in Economics," Economics Papers from University Paris Dauphine 123456789/13605, Paris Dauphine University.
  8. Majumdar, Mukul & Mitra, Tapan, 1983. "Dynamic Optimization with a Non-Convex Technology: The Case of a Linear Objective Function," Review of Economic Studies, Wiley Blackwell, vol. 50(1), pages 143-51, January.
  9. Majumdar, Mukul & Mitra, Tapan, 1982. "Intertemporal allocation with a non-convex technology: The aggregative framework," Journal of Economic Theory, Elsevier, vol. 27(1), pages 101-136, June.
  10. Skiba, A K, 1978. "Optimal Growth with a Convex-Concave Production Function," Econometrica, Econometric Society, vol. 46(3), pages 527-39, May.
  11. Dechert, W. Davis & Nishimura, Kazuo, 1983. "A complete characterization of optimal growth paths in an aggregated model with a non-concave production function," Journal of Economic Theory, Elsevier, vol. 31(2), pages 332-354, December.
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