Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099397 | Journal of Economic Dynamics and Control | 2008 | 11 Pages |
Abstract
In the context of the classical stochastic growth model, we provide a simple proof that the optimal capital sequence is strictly bounded away from zero whenever the initial capital is strictly positive. We assume that the utility function is bounded below and the shocks affecting output are bounded. However, the proof does not require an interval shock space, thus, admitting both discrete and continuous shocks. Further, we allow for finite marginal product at zero capital. Finally, we use our result to show that any optimal capital sequence converges globally to a unique invariant distribution, which is bounded away from zero.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Partha Chatterjee, Malik Shukayev,