Learning-by-doing and the optimal Ramsey interest rate

Bidyut Talukdar ()

Economics Bulletin, 2015, vol. 35, issue 1, 53-60

Abstract: We add learning-by-doing to firms technology in an imperfectly competitive Ramsey model and study optimal interest rate. Our main result is that the Ramsey allocation features an inverse relationship between optimal nominal interest rate and the degree of learning rate. We show that a sufficiently high degree of learning rate can reinstate the optimality of the Friedman rule.

Keywords: learning-by-doing; organizational capital; Ramsey model; optimal policy (search for similar items in EconPapers)
JEL-codes: E0 E4 (search for similar items in EconPapers)
Date: 2015-03-11
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Citations: View citations in EconPapers (1)

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