Optimal Growth: Discrete Time Analysis

Alfonso Novales, Esther Fernández and Jesus Ruiz

Chapter 4 in Economic Growth, 2022, pp 169-211 from Springer

Abstract: Abstract We consider in this chapter the discrete time version of some of the issues discussed in the previous chapter. We introduce a government in the economy and define and characterize the competitive equilibrium. The intertemporal government budget constraint, the relationship between the competitive equilibrium allocation and that of the benevolent planner mechanism, and the Ricardian doctrine, can be all analyzed in discrete time in a similar fashion as we have done in the continuous time version of the model. Dealing with all the details of the discrete time version of the Cass–Koopmans economy is very instructive in order to be able to formulate alternative, more complex growth models, as well as to perform policy analysis, as we do toward the end of the chapter.

Keywords: Budget constraint; Physical capital; Competitive equilibrium; Transversality condition; Welfare cost (search for similar items in EconPapers)
Date: 2022
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Chapter: Optimal Growth: Discrete Time Analysis (2014)
Chapter: Optimal Growth. Discrete Time Analysis (2009)
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DOI: 10.1007/978-3-662-63982-5_4

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