On capital accumulation paths in a neoclassical stochastic growth model

Economic Theory, 1998, vol. 11, issue 2, pages 457-464

Abstract: Boldrin and Montrucchio [2] showed that any twice continuously differentiable function could be obtained as the optimal policy function for some value of the discount parameter in a deterministic neoclassical growth model. I extend their result to the stochastic growth model with non-degenerate shocks to preferences or technology. This indicates that one can obtain complex dynamics endogenously in a wide variety of economic models, both under certainty and uncertainty. Further, this result motivates the analysis of convergence of adaptive learning mechanisms to rational expectations in economic models with (potentially) complicated dynamics.

JEL-codes: D90 C61 (search for similar items in EconPapers)
Date: 1998-01-30
Note: Received: June 21, 1996; revised version: October 31, 1996

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