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Global stability and the “turnpike” in optimal unbounded growth models

Martin Jensen ()

Journal of Economic Theory, 2012, vol. 147, issue 2, 802-832

Abstract: This study proves various global stability results for unbounded optimal growth models. The main theorem states that any optimal path will eventually be in the neighborhood of a balanced growth path if future utility is sufficiently weakly discounted. The assumptions allow for non-smooth technologies, joint production, and production in independent sectors. Hence, the results form the integration of new growth and turnpike theory sought by McKenzie (1998) [31] in his Ely lecture. The applicability of the results is exemplified by means of a number of cases from growth theory and other areas of economics.

Keywords: Optimal growth; New growth theory; Homogeneous programming; Turnpike; Balanced growth path; Global stability; von Neumann equilibrium (search for similar items in EconPapers)
JEL-codes: O41 C61 C62 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1016/j.jet.2010.07.010

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