Comparative Dynamics in Aggregate Models of Optimal Capital Accumulation

Robert Becker

The Quarterly Journal of Economics, 1985, vol. 100, issue 4, 1235-1256

Abstract: The hypothesis that capital increases at each time in response to an increase in the discount factor is explored for a class of aggregate models of optimal accumulation. When the optimal program is monotonic, capital is shown to increase with an increase in the discount factor. A counterexample in the case of oscillating programs is discussed. An application of the monotone case is given for an adjustment cost model of the firm.

Date: 1985
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