Recursive Utility and Turnpike Theory for GMM Thompson Aggregators

Robert Becker and Juan Pablo Rincón-Zapatero

No 2020-001, CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington

Abstract: The existence of a unique optimum, a unique optimal stationary program, and a turnpike theorem are demonstrated for a neoclassical one sector optimal growth model. The plannerís allocation problem is formulated as a discrete time deterministic, infinite horizon programming model. The production sector is subject to diminishing marginal returns to capital. The plannerís objective function is derived from a Generalized Marinacci and Montrucchio (GMM) Thompson aggregator preference. A given Thompson aggregator may be associated with many intertemporal utility functions (which may not be ordinally equivalent). The choice of one of these representations over another is shown to be a matter of mathematical tractability. There is an observational equivalence between those alternative objective functions: the qualitative features of the optimal solution do not depend on the particular utility function representation of the underlying Thompson aggregator preference structure.

Keywords: Recursive Utility; Thompson Aggregators; Generalized Marinacci Montrucchio Aggregators; Koopmans Equation; Extremal Fixed Points; Turnpike Theorem; Discounted Golden-Rule; Observational Equivalence Theorem (search for similar items in EconPapers)
JEL-codes: D15 D50 E10 E13 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2020-01
New Economics Papers: this item is included in nep-mac and nep-upt
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://caepr.indiana.edu/RePEc/inu/caeprp/caepr2020-001.pdf (application/pdf)

Related works:
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:inu:caeprp:2020001

Access Statistics for this paper

More papers in CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington Contact information at EDIRC.
Bibliographic data for series maintained by Center for Applied Economics and Policy Research ().