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The Behaviour of the Saving Rate in the Neoclassical Optimal Growth Model

Anastasia Litina () and Theodore Palivos

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: This paper characterizes analytically the saving rate in the Ramsey-Cass-Koopmans model with a general production function when there exists both exogenous and endogenous growth. It points out conditions involving the share of capital and the elasticities of factor and intertemporal substitution under which the saving rate path to its steady-state value exhibits overshooting, undershooting, or is monotonic. Simulations illustrate these interesting dynamics. The paper also identifies the general class of production functions that render the saving rate constant along the entire transition path and hence make the Ramsey-Cass-Koopmans model isomorphic to that of Solow-Swan.

Keywords: The Ramsey-Cass-Koopmans model; Saving rate; Elasticities of Substitution (search for similar items in EconPapers)
JEL-codes: E20 O41 O10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-dge and nep-mac
Date: 2008-06, Revised 2008-06
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http://aphrodite.uom.gr/econwp/pdf/wp0805.pdf

Related works:
Journal Article: THE BEHAVIOR OF THE SAVING RATE IN THE NEOCLASSICAL OPTIMAL GROWTH MODEL (2010) Downloads
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Persistent link: http://EconPapers.repec.org/RePEc:mcd:mcddps:2008_05

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