Economics - Research Publications

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Author: Rudnicki, Ryszard × Author: STACHURSKI, JOHN × End date: 2004 × Start date: 2004 × Type: Preprint ×

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    Stochastic growth with nonconvexities: the optimal case
    Nishimura, Kazuo ; Rudnicki, Ryszard ; STACHURSKI, JOHN ( 2004-02)
    This paper studies optimal investment and dynamicbehaviour of stochastically growing economies. We assume neitherconvex technology nor bounded support of the productivity shocks.A number of basic results concerning the investment policy and theRamsey–Euler equation are established. We also prove a fundamentaldichotomy pertaining to optimal growth models perturbedby standard econometric shocks: Either an economy is globallystable or it is globally collapsing to the origin.