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Non-convex aggregative technology and optimal economic growth

Author

Listed:
  • Manh Hung Nguyen

    (Université de Laval)

  • Cuong Le Van

    (CERMSEM)

  • Philippe Michel

    (GREQAM et EUREQua)

Abstract

This paper examines a model of optimal growth where the aggregation 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

Suggested Citation

  • Manh Hung Nguyen & Cuong Le Van & Philippe Michel, 2005. "Non-convex aggregative technology and optimal economic growth," Cahiers de la Maison des Sciences Economiques b05095, Université Panthéon-Sorbonne (Paris 1).
  • Handle: RePEc:mse:wpsorb:b05095
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    File URL: https://halshs.archives-ouvertes.fr/halshs-00197556
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    References listed on IDEAS

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    1. repec:dau:papers:123456789/13605 is not listed on IDEAS
    2. 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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    4. 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.
    5. Kamihigashi, Takashi & Roy, Santanu, 2007. "A nonsmooth, nonconvex model of optimal growth," Journal of Economic Theory, Elsevier, vol. 132(1), pages 435-460, January.
    6. Skiba, A K, 1978. "Optimal Growth with a Convex-Concave Production Function," Econometrica, Econometric Society, vol. 46(3), pages 527-539, May.
    7. Amir, Rabah, 1996. "Sensitivity analysis of multisector optimal economic dynamics," Journal of Mathematical Economics, Elsevier, vol. 25(1), pages 123-141.
    8. 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.
    9. Cuong Le Van & Rose-Anne Dana, 2003. "Dynamic Programming in Economics," Post-Print halshs-00119098, HAL.
    10. Cuong Le Van & Rose-Anne Dana, 2003. "Dynamic Programming in Economics," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00119098, HAL.
    11. repec:dau:papers:123456789/416 is not listed on IDEAS
    12. Takashi Kamihigashi & Santanu Roy, 2006. "Dynamic optimization with a nonsmooth, nonconvex technology: the case of a linear objective function," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(2), pages 325-340, October.
    13. Mukul Majumdar & Tapan Mitra, 1983. "Dynamic Optimization with a Non-Convex Technology: The Case of a Linear Objective Function," Review of Economic Studies, Oxford University Press, vol. 50(1), pages 143-151.
    14. K. Askri & C. Le Van, 1998. "Differentiability of the Value Function of Nonclassical Optimal Growth Models," Journal of Optimization Theory and Applications, Springer, vol. 97(3), pages 591-604, June.
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    Citations

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    Cited by:

    1. Kerstens, Kristiaan & O’Donnell, Christopher & Van de Woestyne, Ignace, 2019. "Metatechnology frontier and convexity: A restatement," European Journal of Operational Research, Elsevier, vol. 275(2), pages 780-792.
    2. Ken-Ichi Akao & Takashi Kamihigashi & Kazuo Nishimura, 2015. "Critical Capital Stock in a Continuous-Time Growth Model with a Convex-Concave Production Function," Discussion Paper Series DP2015-39, Research Institute for Economics & Business Administration, Kobe University.
    3. Cuong Le Van & Çağrı Sağlam & Agah Turan, 2016. "Optimal Growth Strategy under Dynamic Threshold," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(6), pages 979-991, December.
    4. Akao, Ken-Ichi & Kamihigashi, Takashi & Nishimura, Kazuo, 2011. "Monotonicity and continuity of the critical capital stock in the Dechert–Nishimura model," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 677-682.
    5. Nguyen-Huu, Thanh Tam & Pham, Ngoc-Sang, 2021. "Escaping the middle income trap and getting economic growth: How does FDI can help the host country?," MPRA Paper 106151, University Library of Munich, Germany.
    6. Crettez, Bertrand & Hayek, Naila & Morhaim, Lisa, 2017. "Optimal growth with investment enhancing labor," Mathematical Social Sciences, Elsevier, vol. 86(C), pages 23-36.
    7. Mark Müser & Harald Dyckhoff, 2017. "Quality splitting in waste incineration due to non-convex production possibilities," Journal of Business Economics, Springer, vol. 87(1), pages 73-96, January.

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    More about this item

    Keywords

    Non-convex aggregative technology; optimal economic growth; steady state;
    All these keywords.

    JEL classification:

    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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