Optimal Growth: Discrete Time Analysis

Alfonso Novales, Esther Fernández and Jesus Ruiz

Chapter Chapter 4 in Economic Growth, 2014, pp 161-201 from Springer

Abstract: Abstract In this chapter we present 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 towards the end of the chapter. It is particularly important to get familiar with the formulation and use of the transversality condition and with the characterization of stability conditions. As we will see below, stability conditions are crucial to generate a numerical solution for this model in the form of a set of time series for the endogenous variables.

Keywords: Budget Constraint; Physical Capital; Competitive Equilibrium; Transversality Condition; Welfare Cost (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Chapter: Optimal Growth: Discrete Time Analysis (2022)
Chapter: Optimal Growth. Discrete Time Analysis (2009)
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:spr:sptchp:978-3-642-54950-2_4

Ordering information: This item can be ordered from
http://www.springer.com/9783642549502

DOI: 10.1007/978-3-642-54950-2_4

Access Statistics for this chapter

More chapters in Springer Texts in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().