OPTIMAL INVESTMENT ALLOCATION IN DECENTRALIZED MARKETS

Ricardo Araujo and Helmar Nunes Moreira ()
Additional contact information
Helmar Nunes Moreira: Universidade de Brasília

Revista de Economia Mackenzie (REM), 2014, vol. 12, issue 1, 200-223

Abstract: This paper makes three contributions to the Feldman-Mahalanobis (F-M) model. First, it overcomes the limitation of the original model, which assumes a passive role of consumption demand, by extending the F-M model through the introduction of intertemporal maximization of consumption. Second, it shows that decentralized markets can mimic the dynamic behavior of the centrally planned economy with two sectors, consumption and investment goods. This is accomplished by using Cobb-Douglas production functions in both sectors. Third, in contrast with the F-M model in which the solutions are unstable, this paper proves the stability of the steady state solutions.

Keywords: Investment allocation; Two sector models; Dynamic optimization. (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

Downloads: (external link)
http://editorarevistas.mackenzie.br/index.php/rem/article/view/7792 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aft:journl:v:12:1:2014:2015:p:200-223

Access Statistics for this article

More articles in Revista de Economia Mackenzie (REM) from Mackenzie Presbyterian University, Social and Applied Sciences Center Contact information at EDIRC.
Bibliographic data for series maintained by Instituto Presbiteriano Mackenzie (IPM) ().