Stochastic Optimal Growth when the Discount Rate Vanishes

Kazuo Nishimura and John Stachurski ()

No 908, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: It has been shown that long-run optimality of the limit of discounted optima when the discount rate vanishes is implied by a condition on the value function of the optimal program. We suggest a new method to verify this condition in the context of one-sector optimal growth. The idea should be more widely applicable.

Pages: 15 pages
Date: 2004
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