Mean growth and stochastic stability in endogenous growth models

Raouf Boucekkine (), Patrick Pintus and Benteng Zou

Post-Print from HAL

Abstract: Under uncertainty, mean growth of, say, wealth is often defined as the growth rate of average wealth, but it can alternatively be defined as the average growth rate of wealth. We argue that stochastic stability points to the latter notion of mean growth as the theoretically relevant one. Our discussion is cast within the class of continuous-time AK-type models subject to geometric Brownian motions. First, stability concepts related to stochastic linear homogeneous differential equations are introduced and applied to the canonical AK model. It is readily shown that exponential balanced-growth paths are not robust to uncertainty. In a second application, we evaluate the quantitative implications of adopting the stochastic-stability-related concept of mean growth for the comparative statics of global diversification in the seminal model due to Obstfeld (1994).

Keywords: Global diversification; Stochastic stability; Mean growth; Endogenous stochastic growth; AK model (search for similar items in EconPapers)
Date: 2018-05
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Published in Economics Letters, 2018, 166 (C), pp.18 - 24. ⟨10.1016/j.econlet.2018.02.014⟩

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

Related works:
Journal Article: Mean growth and stochastic stability in endogenous growth models (2018)
Working Paper: Mean Growth and Stochastic Stability in Endogenous Growth Models (2018)
Working Paper: Mean Growth and Stochastic Stability in Endogenous Growth Models (2018)
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:hal:journl:hal-01793166

DOI: 10.1016/j.econlet.2018.02.014

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().