A multidimensional, nonconvex model of optimal growth

Stefano Bosi and Thai Ha-Hui
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Stefano Bosi: Université Paris-Saclay, Univ Evry, EPEE
Thai Ha-Hui: Université Paris-Saclay, Univ Evry, EPEE

No 23-07, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: In this article, we consider a multidimensional economy where the standard supermodularity property fails. We generalize the notion of net gain of investment, introduced by Kamihigashi and Roy [7] and applied to one-sector growth models, to the case of multiple capital stocks. We prove the convergence to the set of steady states without relying on the monotonicity of optimal path. Our approach differs from the standard dynamic programming based on convexity or supermodularity. We find that preferences are key to shape the economy in the long run.

Keywords: net gain of investment; multidimensional economy; nonconvexities (search for similar items in EconPapers)
JEL-codes: C61 D51 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2023
New Economics Papers: this item is included in nep-gro
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