Nonclassical Brock-Mirman Economies

Manjira Datta, Leonard Jay Mirman and Kevin Reffett ()
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Kevin Reffett: W. P. Carey School of Business Department of Economics, http://wpcarey.asu.edu/Directory/stafffaculty.cfm?cobid=1039534

Working Papers from Department of Economics, W. P. Carey School of Business, Arizona State University

Abstract:

We show that monotone methods, especially, those based on lattice theory and lattice programming can produce results, e.g., on the monotonicity of the optimal programs, as well as on the existence of fixed points, consistent with the current macroeconomics literature, in the absence of continuity, differentiability and concavity. We illustrate the use and power of the lattice theory techniques in two simple and very useful models. First, the Brock-Mirman growth model is studied in a nonclassical setting. Here all the assumptions of the original model are made except that the production function is allowed to be non-concave. The second model is an extension of the Brock-Mirman model that goes beyond the planner's solution and allows for decentralized decisions in equilibrium. JEL Classification: C61, C62, D90, E60

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