 The random two-sector RSS model: On discounted optimal growth without Ramsey-Euler conditionsM. Ali Khan and Zhixiang Zhang Journal of Economic Dynamics and Control, 2023, vol. 146, issue C Abstract: This paper shows that the introduction of uncertainty in the two-sector model due to Robinson-Solow-Srinivasan (RSS) fully subdues the veritable plethora of the results that have been obtained the theory of deterministic optimal growth. Rather than an “anything goes” theorem that admits optimal cyclical and chaotic trajectories for the discrete-time deterministic version, we present results on the existence, uniqueness, asymptotic stability and comparative-static properties of the steady state measure. We relate the basic intuition of our result to global games, and note that the properties of value and policy functions we identify rely on “supermodularity” and “increasing-differences property” of Veinott-Topkis-Milgrom-Shannon. While of interest in themselves, our results highlight a methodological advance in developing the theory of optimal growth without Ramsey-Euler conditions. Keywords: Stochastic optimal growth; Discounting; 2-Sector RSS model; Ramsey-Euler conditions (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:146:y:2023:i:c:s016518892200286x DOI: 10.1016/j.jedc.2022.104583 Access Statistics for this article Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok More articles in Journal of Economic Dynamics and Control from Elsevier |
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