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Solving The Discrete-Time Stochastic Ramsey Model

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  • Chris Elbers

    (VU University Amsterdam)

Abstract

This note describes methods for solving deterministic and stochastic versions of the discrete-time Ramsey model of economic growth. We derive an iterative procedure for solving the Euler equation and apply it to an example adapted from Pan (2007).

Suggested Citation

  • Chris Elbers, 2009. "Solving The Discrete-Time Stochastic Ramsey Model," Tinbergen Institute Discussion Papers 09-018/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20090018
    as

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    File URL: https://papers.tinbergen.nl/09018.pdf
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    References listed on IDEAS

    as
    1. anonymous, 1995. "Does the bouncing ball lead to economic growth?," Regional Update, Federal Reserve Bank of Atlanta, issue Jul, pages 1-2,4-6.
    2. Chris Elbers & Jan Willem Gunning & Bill Kinsey, 2007. "Growth and Risk: Methodology and Micro Evidence," The World Bank Economic Review, World Bank, vol. 21(1), pages 1-20.
    3. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    4. Xavier Sala-I-Martin, 1997. "Transfers, Social Safety Nets, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 81-102, March.
    5. Lei Pan, 2009. "Risk Pooling through Transfers in Rural Ethiopia," Economic Development and Cultural Change, University of Chicago Press, vol. 57(4), pages 809-835, July.
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    More about this item

    Keywords

    Ramsey model; Stochastic Ramsey model; Solution methods;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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